Visa (NYSE: V) Loses Favor from Investors, Analysts at Bank of America (NYSE: BAC) and Citigroup (NYSE: C)

Visa (NYSE: V) is now trading near its 52-week low after being the largest decliner on the S&P 500 during trading on Wednesday after analysts issued concerns about the revenue of U.S. credit card companies.

Bank of America Corp (NYSE: BAC)’s Merrill Lynch division equities research analysts reduced their recommendation on Visa (NYSE: V) from an “underperform” rating to a “neutral” rating citing skepticism about whether or not the company can maintain its pricing power and whether or not new regulations would cut into the margins that it makes on its credit card fees. The analysts at Merrill Lynch also reiterated a weak “neutral” rating on MasterCard (NYSE: MA).

“We believe it will be difficult for the current balance of power in the payment system to be sustained longer term, with Visa generating 55% plus operating margins while issuers and merchants struggle to make money,” said research analysts James Kissane, Georgios Mihalos and Karti Bhatt, in a note to clients.

Citigroup, Inc (NYSE: C)’s Donald Fandetti also weighed in on Visa’s woes in a note to clients on Wednesday saying that Visa has a higher risk of losing revenue than MasterCard because of credit card regulations, saying that it is “too early to step in on the stocks.”

Analysts have largely taken aim at Visa for structural and regulatory risks, which have caused a significant drop in Visa’s share-price. The Merrill Lynch analysts also cited consolidation of credit-card issuing banks and merchant-side players leaves the company’s pricing power as “diminished.” The analysts cited that banks are opting to underplay the visibility of MasterCard and Visa’s branding on their cards.

Visa Inc. (Visa) operates the retail electronic payments network and manages a global payments brand. It facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. Visa provides financial institutions with product platforms encompassing consumer credit, debit, prepaid and commercial payments. VisaNet, the centralized, global processing platform, enables to provide financial institutions and merchants with a range of product platforms, transaction processing and related services. In July 2010, the Company acquired CyberSource Corporation.

Shares of Visa (NYSE: V) traded down 0.15% during mid-day trading on Thursday, hitting $68.48.