Visa (NYSE:V) stock is one of the top “blood in the street” opportunities on the market right now.
In fact, after falling from a 52-week high of $214 to $140, it’s easy to say the chaos has been priced in. But given the severity of the coronavirus from China, I still recommend waiting on the sidelines.
For one, the odds of us slipping into a recession have only increased with the virus, which could put millions of jobs in jeopardy. Financial markets have cratered. Life as we know it around the world has come to a screeching halt. Schools and businesses have closed up shop. Sports and concert venues have canceled events. Bars, restaurants and retailers are closing.
The travel industry is in tatters. Oil and gas companies have cut spending and dividends. And the average person has had to change their daily routine. That’s all in an effort to battle the coronavirus. Of course, these massive changes will all impact spending.
While Visa will be one of the top blood in the street stocks to own later, I’d avoid it for now.
Consumer Confidence Is Sinking
As the coronavirus continues to spread, consumer sentiment is plummeting to lows. But what’s even worse is that sentiment could keep falling as negativity pushes the U.S. into crisis mode.
“It may be just temporary, but as the events of the past few days have shown, it could result in unprecedented disruptions,” MarketWatch contributor Jeffry Bartash wrote March 13. “The drastic makeover in how Americans work, play and live has already triggered a bear market on Wall Street and it’s going to affect virtually every aspect of people’s lives.”
Of course, that’ll impact stocks like Visa.
In fact, it already said it expects for first-quarter revenue to be closer to the lower end of its guidance for revenue of between $4.78 billion and $4.84 billion.
In addition, “Cross-border growth rates have deteriorated week by week since the coronavirus outbreak in China, and trends through February 28, 2020 do not yet fully reflect the impact of the coronavirus spreading outside of Asia. As such, we anticipate that this deteriorating trend has not bottomed out yet.”
Visa’s Revised Outlook May Be Too Optimistic
Even with Visa’s lower guidance, Piper Sandler analyst Christopher Donat sees further decay, and lowered his price target to $197 from $204.
“We now expect COVID-19 to have a more negative impact,” he wrote. “We now think that the revised outlooks for both companies are overly optimistic. … However, with the virus spreading to Europe and North America, we now expect impacts not just on cross-border activity but also on domestic spending activity.”
At some point, V stock will be a sizable buying opportunity.
However, with coronavirus fears spiraling out of control, gravely impacting consumers around the globe, avoid it for now. For now, Visa will struggle to rebound. Just keep it on your radar as a stock to buy for when the virus becomes a distant, bad memory.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
