Visa's revenue miss prompts caution on Wall Street

By Niket Nishant and Manya Saini

(Reuters) -Visa's underwhelming third-quarter revenue prompted a number of brokerages to cut their price targets on the company's stock, stoking concerns about slowing growth in customer spending and casting a shadow on the U.S. payments industry.

The results underscore the challenges the industry is facing after several quarters of growth as inflation and high borrowing costs prompt a large section of customers to cut back on purchases, while wage growth loses steam.

Visa also reported a slowdown in U.S. payments volumes through the first three weeks of July, which it said was due to a number of factors including the CrowdStrike-related outage last week.

Shares of Visa fell nearly 4% to $254.13 and wiped out the gain they have seen this year. At least nine prominent Wall Street brokerages lowered their price targets on the stock.

"We don't expect a positive change in narrative," Jefferies analysts wrote in a note. "The current (valuation) multiple will prove a good entry point, but (we) struggle to see a near-term catalyst."

"We would not be surprised to see shares more range-bound over the next few months until there is greater clarity on the FY25 guide," Raymond James wrote.

Rival Mastercard's shares were down 2.5%, while PayPal Holdings and Block slipped 1% and 2.6%, respectively.

Visa also said payments volumes in Asia Pacific had slowed due to the economic environment, most notably in China. A prolonged property crisis and weak business sentiment has weakened the country's economy.

Meanwhile, other large U.S. companies such as Coca-Cola, PepsiCo and Domino's Pizza also warned of pressures on lower-income households in their latest quarterly results.

"We're seeing much more price sensitivity and consumers looking for more value," PepsiCo CEO Ramon Laguarta said earlier this month.

(Reporting by Niket Nishant, Manya Saini and Ananya Mariam Rajesh in Bengaluru; Editing by Shinjini Ganguli)