Stifel downgraded Evertec Inc EVTC Monday from Buy to Hold after a surprise CEO change.
Analyst Christopher Brendler commented that “Friday's announcement of a new CEO raises our concerns about EVTC. Although new leadership may help long-term, we don't like the signaling especially after poor 3Q14 results.
“With international expansion now seemingly pushed out even further amid rising concerns about Puerto Rico, we prefer to take a wait-and-see approach to the management change.”
Brendler continued, “we are increasingly concerned about the near-term outlook for several reasons. First and foremost, we view the timing of the CEO change as a bad signal and results could get worse before Shuessler is able to have an impact. At the very least, we think replacing the CEO likely means material international partnerships are not imminent. This comes after our patience has already been tested throughout 2014, and with the change in CEO, we may now have to wait until 2016.”
“EVTC's 2014 results have been disappointing starting with unexpected weakness in Business Services (BS) and broadening into the core merchant acquiring (MA) and payment processing (PP) businesses last quarter.
“Combined, our 2015 revenue estimates are down 8 percent since we initiated coverage a year ago with all 3 segments materially lower (MA -5 percent, PP -7 percent, BS -11 percent). With PR economy still weakening, we think risks are now weighted to the downside,” according to Brendler.
Evertec recently traded at $22.00, down $0.36.
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