UPDATE: Deutsche Bank Downgrades Total System Services to Hold on Low Visibility

In a report published Wednesday, Deutsche Bank analyst Bryan Keane downgraded the rating on Total System Services

from Buy to Hold, and lowered the price target from $28.00 to $25.00. In the report, Keane noted, “TSS reported net revenues of $404m (+2.3% Y/Y) and EPS of $0.33 (ex-M&A expense; includes ~$0.04 from lower taxes) came in below our est $414.6m (4.9% Y/Y) in revenues and $0.34 in EPS due to one-time expenses, weak transaction growth, and higher-than-expected BAMS deconversion. Due to a pushout of 2 of the 3 client conversion scheduled for 2H13 (26m AOF were originally expected to convert in 2013) and limited visibility, we are lowering our FY13 and FY14 EPS est by $0.02 and $0.04 to $1.42 and $1.60 respectively. Ournew 2013 estimates are now slightly below guidance with rev growth at 5.3% and EPS at $1.42 (we have little confidence TSS can hit its FY13 guidance). Although NetSpend deal should be accretive, we have concerns around the prepaid sector and increasing competition.” Total System Services closed on Tuesday at $24.24.