Investors poised to buy stock in credit-card company Visa when it goes public are not likely to enjoy the same type of explosive share price growth seen with MasterCard Inc, cautioned Barron's financial newspaper. ( Reuters )
While MasterCard shares have surged 400 percent since its initial public offering, Visa is likely to be held back both by current market and company specific conditions, Barron's said in its March 3 edition.
Investors should not bid too aggressively if Visa shares jump much above the planned IPO price range of $37 to $42, the newspaper said.
Visa gets less of its revenue from outside the mature U.S. market than MasterCard, the article noted. In addition, Visa's operating margins, at near 30 percent, are on a par with MasterCard's current rate, implying little room for the kind of profitability acceleration seen with its main rival.
A first-day gain of less than 5 percent could make Visa a solid long-term holding at a reasonable price, the newspaper said.