UPDATE: Compass Point Reiterates on Higher One Holdings as Neg-Reg Rules Could be Transformational
In a report published Monday, Compass Point analyst Michael Tarkan reiterated a Sell rating on Higher One Holdings (NYSE: ONE), but lowered the price target from $7.00 to $6.00.
In the report, Compass Point noted, “We have become incrementally more cautious after taking a more detailed look at the Department of Education's (ED) first draft of its new regulations on campus debit cards. Our early read on the draft rules was primarily focused around the elimination of certain fees; however, the proposal also includes several new provisions that could significantly diminish the company's marketing efficiencies and drive down account adoption rates and revenues. While Higher One is slowly diversifying its revenue base, total account revenue still comprised a meaningful 64% of its 2013 total revenue. In addition, while this is only a first draft and provisions are subject to change, we believe the proposal provides key insight into ED's initial stance on the issues.
"Furthermore, given our expectation that a consensus by committee members is unlikely to be reached, the draft should be taken seriously as it would be up to ED to ultimately craft the final rules. Finally, while we do view ONE as a takeout candidate longer term given its large student account base, this uncertainty should keep potential bidders on the sidelines as the forward earnings outlook remains unclear.”
Higher One Holdings closed on Friday at $8.02.
Latest Ratings for ONE
|Jun 2016||SunTrust Robinson Humphrey||Downgrades||Buy||Neutral|
|Dec 2015||Barrington Research||Upgrades||Market Perform||Outperform|
|Oct 2014||Compass Point||Upgrades||Sell||Neutral|
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