BTIG Downgrades First Data To Neutral

BTIG has downgraded First Data Corp FDC to Neutral from Buy on valuation, sending its stock down 5 percent. The brokerage also removed the price target of $13 following the achievement of that level.

"We believe FDC's shares are now fairly valued following a strong rebound from the plunge that followed the release of its 4Q15 results and that modest revenue growth and the burden of high leverage may present impediments to significant additional appreciation," analyst Mark Palmer said in a client note.

Shares of First Data have declined more than 20 percent since February 10 to a low of $8.76 on lower-than-expected quarterly revenue and the management neglected to provide revenue and earnings guidance for the full year.

BTIG viewed the extent of First Data's share price decline on that day as disproportionate to the relatively benign facts and metrics the company had disclosed.

"While FDC faces some challenges, it still generates a significant amount of free cash flow, and we noted our view that the company would be able to de-lever over time for that reason even if choppy credit markets made additional balance-sheet repair appear a more challenging proposition," Palmer noted.

Since February 10, shares of First Data have surged more than 60 percent to touch a high of $13.74 on March 4. The analyst said the stock has bounced back aggressively and now believes the stock has returned to a valuation that is more in line with its growth prospects and ability to enhance its earnings by refinancing a portion of its $19.6 billion in debt as of year-end 2015.

"We do not think it would be unreasonable to state that FDC shares have moved up too far, too fast," Palmer added.

Shares of First Data were down 3.6 percent at $13.10. They have dropped 18 percent this year.