Argus Upgrades Verifone Systems To Buy

• The share price of VeriFone Systems, Inc. PAY has declined by almost 28 percent, year to date.
• Argus’ Stephen Biggar has upgraded the rating on the company from Hold to Buy, with a price target of $35.
• Biggar believes that the decline in the share price, year to date, was primarily driven by non-fundamental factors and that the present stock valuation offers an attractive entry point.

Analyst Stephen Biggar explained that “VeriFone remains on a strong growth trajectory, aided by an upgrade cycle for payment devices to accommodate chip-embedded credit cards.”

The company announced on September 28 that it intended to undertake a share buyback initiative worth $200 million. This is the first such share buyback program in the history of the company and represents 6 percent of the outstanding common stock at its current share price.

According to the Argus report, “[T]he transition to EMV or chip-embedded credit cards, designed to enhance credit card security, has led many large merchants to purchase VeriFone's MX 900 Series terminals and mobile solutions.”

In addition, the company has expanded its operating margins via its restructuring efforts. Although the management has made a slight downward revision to its earnings guidance, Biggar believes that the stock is attractively values at present, given the expectations of 22 percent earnings growth in 2016.