Visa Stock Flashes "Buy" Signal Ahead of Earnings

Visa will report earnings after the close tonight

Managing Editor
Jan 30, 2019 at 11:45 AM
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Blue chip Visa Inc (NYSE:V) takes its turn in the earnings confessional after the close tonight, hoping to follow in the footsteps of fellow Dow names Apple (AAPL) and Boeing (BA). Ahead of the credit card company's quarterly report, Visa is flashing a bullish signal, if past is precedent. 

More specifically, V is trading within one standard deviation of its 52-week moving average. After the last 13 times Visa pulled back to this moving average after a lengthy stretch above it, the equity was up 5.2%, on average, one month out, and was positive 92% of the time, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

At last check, Visa stock was up 0.6% to trade at $135.72. A climb of similar magnitude would vault the Dow name to the $142-$143 area, past recent congestion around $136-$140. And sitting just above there is V's Oct. 1 record high of $151.56. Overall, the shares boast a solid 10% gain year-over-year. 

Weekly Stock Chart Visa

As for the company's earnings history, it's rather muted. Overall, the equity has averaged a historical earnings move of 2.6% in the past two years, regardless of direction. This time around, the options market is pricing in a 5.1% next-day move for the security, according to implied earnings deviation data. Put another way, none of the last eight post-earnings reactions were as large as what the options market is pricing in this time around

The mood is bullish in the options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), V's 10-day call/put volume ratio of 1.73 indicates long calls have outnumbered puts by a nearly 2-to-1 ratio. What's more, that ratio ranks in the 74th percentile of its annual range, meaning calls have been bought to open over puts at a healthier-than-usual pace in the last two weeks.

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