NEW YORK—Shares of credit card processor Visa Inc. edged up in premarket trading Thursday, but Lehman Brothers says the stock has reached a fair price.
The firm began coverage of the San Francisco company by rating its shares "Equal weight" and assigning a price target of $85 per share. Lehman analysts Bruce W. Harting and Darrin D. Peller said Visa is poised for years of revenue growth because consumers are increasingly using credit cards instead of cash. But shares are now trading at a premium to rival MasterCard Inc., and the firm believes the stocks should trade at similar levels.
Visa reported its first-quarter results after the close Monday, and shares climbed 10.3 percent in the two trading days since. On Wednesday, the stock set a high of $84.81 before closing at $83.45.
The analysts also said Visa has "significant room" for cost cuts, which could lead to strong profit margin improvement.
Shares gained 64 cents to $84.09 in premarket trading. The stock began trading on March 19.
