UPDATE: Stifel Initiates Coverage Evertec on Potential Upside in Puerto Rico Economy
In a report published Tuesday, Stifel Nicolaus analyst Christopher Brendler initiated coverage of Evertec, Inc. (NYSE: EVTC) with a Buy rating and a $27.00 price target, based on 14x its 2015 EPS estimate.
According to the report, Evertec is a compelling international growth story with a strong base in Puerto Rico and significant growth opportunities in select new markets including Panama, Costa Rica and Columbia.
Some highlights from the report included:
-”While the Puerto Rican economy remains a concern, we see more potential upside as EVTC has maintained at least 5% revenue growth in PR throughout the 7-year recession due to the strong (and growing) tailwind from cash/check conversion to electronic payments."
-”More importantly, with a steadily growing, high FCF base in PR, we see EVTC as uniquely positioned to expand in faster-growing, secondary LatAm markets where EVTC’s scale and cutting edge mobile technology drive electronic payments adoption.”
-”We also like the company's strategy of targeting second-tier markets to avoid to intense competition in larger markets like Brazil and Mexico.”
-”With the stock trading at a material discount to the group (12.4x 2015E adjusted EPS vs. 15.7x), we believe this gap will close as EVTC executes on its growth strategy and disintermediation pressure continues to weigh on domestic acquirers.”
Evertec closed Monday at $24.36.
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