Visa Inc. (V) shares have risen more than 20% this year, but the stock is quickly approaching a technical turning point as its trading range narrows. Many analysts remain confident in the company's short- and long-term prospects following its Investor Day event. Cowen & Co., for instance, maintained its Outperform rating and $105.00 per share price target on Visa, saying that the company is benefiting from an "explosion" of card acceptance locations and should continue to generate high-single-digit or low-double-digit growth rates over the long term.
During the second quarter, the company reported revenue that increased 23.1% to $4.47 billion, beating consensus estimates by $160 million, and earnings per share of 86 cents beat consensus by seven cents. These results follow similar earnings beats during the two previous quarters. The company also instated a $5 billion share buyback program that could help boost shares from a supply/demand prospective. (See also: Visa Crushes Consensus Estimates in Q2.)
From a technical standpoint, the stock has seen its trading range narrow after failing to break out above upper trendline and R1 resistance at $96.85. The relative strength index (RSI) has lost momentum and remains neutral at 52.01, while the moving average convergence divergence (MACD) has trended lower. The upshot is that the neutral RSI means that the stock isn't necessarily overbought, while the MACD could see a bullish crossover in the near term.
Traders should watch for a breakout from R1 resistance toward R2 resistance at $98.46 as the stock approaches the psychologically important $100.00 level. If the stock breaks down from its lower trendline, traders could see a move down to S1 support at $92.30 or S2 support at $89.36 along with some consolidation before any move higher. (For more, see: Visa Stock Has Room to Rise Further.)
Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.