By Sam Boughedda
In a note to investors on Thursday, Morgan Stanley analyst James Faucette said that Visa's (NYSE:V) May update was encouraging, but recession concerns in the second half of the year still weigh on the stock.
The analyst said strong travel demand and healthy US spending continue to hold up despite high inflation and growing recession fears.
"V's card-present cross-border + card-not-present travel volume excluding intra-Europe surpassed 2019 levels for the first time since the start of the pandemic, and reached 108% of 2019 level in May from 94% in April. This should serve to reassure the market that pent-up travel demand and loosening border restrictions should support robust cross-border spending during the summer months," Faucette told clients in a note.
Visa's cross-border volume is also likely benefitting from rising airline fare prices and high inflation in key markets, he added, with the company highlighting strong recoveries in the inbound US and Asia-Pacific travel corridors over the last two months.
"Despite continued healthy volume trends, we acknowledge that uncertainty remains on the travel outlook given concerns around a potential recession in 2H."
Elsewhere, Goldman Sachs analyst Will Nance said Visa’s operational metrics for April and May "should be supportive of shares and the bull thesis around the cross border recovery propelling near term results. Specifically, our analysis implies strong growth in cross border revenues, implying significant upside for the quarter."