Visa's (V) remaining performance obligations provide a small degree of visibility into net revenue growth, particularly for its value added services business, while a minor but growing part of its net revenue growth is associated with rising deferred and contracted revenue, UBS Securities said in a note emailed Tuesday.

Visa's RPOs represent a subset of contracted value-in-kind incentives associated with VAS, the firm noted. VAS paid for through these incentives contributes about 0.5% to 1% to Visa's total net revenue growth and roughly 2% to 4% to VAS growth, according to the note.

The brokerage said it views Visa and Mastercard (MA) as the preferred names for exposure to the broader payments and fintech sector, given their ability to compound revenue in the low-double-digits over the medium-term.

"We believe investors that believe in the persistence of even ~M-HSD revenue growth for Visa & Mastercard will be rewarded," the firm said.

UBS kept its buy rating on Visa with a price target of $410.

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