VeriFone Hits a 52-Week High - Analyst Blog

Shares of VeriFone PAY reached a new 52-week high of $32.94 on Wednesday, Mar 12, 2014. The bullish run reflects VeriFone's impressive first-quarter results and optimistic guidance.

The closing price of VeriFone on Mar 13 was $32.48, representing a strong one-year return of about 54.6% and a year-to-date return of about 26.0%. The S&P 500 jumped 20.2% and 2.0%, respectively, during the same period.

VeriFone delivered a positive earnings surprise of 5.7% over the past four quarters. This Zacks Rank #2 (Buy) stock has a market cap of $3.23 billion and long-term expected earnings growth rate of 14.0%.

Key Growth Catalysts

VeriFone reported better-than-expected first-quarter 2014 results. Moreover, management's optimistic industry outlook is a major positive that drove the share price gain.

Earnings of 20 cents per share (including stock-based compensation) beat the Zacks Consensus Estimate by a nickel. Revenues (excluding amortization of step-down in deferred services net revenues at acquisition) climbed 1.8% year over year to $437.1 million, better than the Zacks Consensus Estimate of $429.0 million.

VeriFone expects non-GAAP revenues in the range of $440.0–$445.0 million for the second quarter of fiscal 2014. This reflects approximately 4.0% year-over-year growth. Management expects second-quarter non-GAAP earnings in the range of 30 to 32 cents. The mid-point of the guided range is down from 36 cents reported in the year-ago quarter.

Industry trends toward more secured products are expected to increase demand for new products, which will replace existing legacy products. This bodes well for VeriFone, going forward. Moreover, VeriFone's innovative product pipeline and customer wins such as Abercrombie & Fitch ANF and Costco COST are significant positives.

The partnership with American Express AXP will also boost VeriFone's customer base, going forward. Moreover, VeriFone has strong growth opportunities in overseas markets, particularly in emerging economies such as Brazil, China, Russia and India.

Estimate Revision

The Zacks Consensus Estimate for the second quarter remained steady at 20 cents over the past 7 days. For fiscal 2014, the estimate has remained unchanged at 94 cents over the same time frame. For fiscal 2015, the earnings estimate has remained unchanged at $1.48 per share over the same period.