KeyBanc: VeriFone Investors May Want To Wait For More Momentum
VeriFone Systems Inc (NYSE: PAY) reported fiscal fourth quarter earnings after the close Tuesday.
The Analyst
KeyBanc Capital Markets' Josh Beck maintains a Sector Weight rating on Verifone's stock with no assigned price target.
The Thesis
Verifone's earnings report consisted of an EPS and net revenue beat and was also highlighted by continued "portfolio-grooming, Beck said. The analyst said this was achieved through:
The divestiture of its taxi business, which should improve operating margins moving forward.
Restructuring a Chinese business into a minority holding during the third quarter.
Creating a petro media 50/50 joint venture.
The actions taken by management did result in a revision in 2018 estimates, as 2017 adjusted revenue was $118 million lower than reported results, Beck said. Verifone is likely to see a $70 million headwind from a delayed Petro EMV cycle and India demonetization in 2018, the analyst said. This means the company is now likely to see a 5- to 6-percent core growth rate next year.
KeyBanc has an $18 fair value estimate on the stock, which is based on a 12.4x multiple on the firm's fiscal 2018 EPS estimate. While this is a discount to the S&P 500 index at 18x, "investors may want to wait to see greater momentum with new products and services to support the bull case or further market issues underlying the bear case," Beck said.
Price Action
Shares of Verifone were trading lower by nearly 4 percent late Wednesday morning.
Related Links:
Mid-Morning Market Update: Markets Open Higher; VeriFone Issues Weak Outlook
7 Stocks To Watch For December 13, 2017
Latest Ratings for PAY
Dec 2017 | Credit Suisse | Maintains | Neutral | |
Nov 2017 | Raymond James | Downgrades | Strong Buy | Outperform |
Sep 2017 | Citigroup | Initiates Coverage On | Neutral |
View More Analyst Ratings for PAY
View the Latest Analyst Ratings
See more from Benzinga
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
