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The Bar For VeriFone Was Already Low This Year -- And Management Just Set It Lower

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The Bar For VeriFone Was Already Low This Year -- And Management Just Set It Lower
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VeriFone Systems Inc (NYSE: PAY) shares are taking a beating on Friday following the release of its second-quarter results after the close of trading on Thursday.

Expectations Go Lower And Lower ...

BTIG in a note commented that management just set the bar lower for the year, even as it was already low for the remainder of the year. The downward revision of the guidance amplified the near-term headwinds facing VeriFone's shares, the firm added.

Reviewing the second-quarter results, analysts Mark Palmer and Giuliano Bologna noted that revenues were modestly better than expected and earnings per share were in line with the consensus estimate.

On the outlook, the analysts said the company reduced its fiscal year 2017 guidance and issued below-consensus guidance for the third quarter.

China Divestment Surprising

BTIG said it wasn't surprised by the company's decision to divest Taxi Solutions, given the competitive pressure from Uber and Lyft. However, the firm expressed surprise at the decision to divest the China unit but noted the company attributed the decision to increasing barriers to doing business in China as a public U.S. tech firm.

The company intends to reallocate the resources and capital to its core payments and commerce platform, the firm added.

Neutral On VeriFone

BTIG reiterated its Neutral rating on VeriFone.

"While we continue to appreciate the company's position as part of an effective global duopoly with Ingenico in the credit- and debit-card terminal space in which secular tailwinds still prevail, we believe it may be a bit too soon and that the stock may not be quite inexpensive enough to justify looking through the ongoing near-term weakness in the company's operating performance," the firm reasoned.

BTIG believes VeriFone's valuation represents a fair multiple, given the near-term uncertainty surrounding the impact of delayed EMV adoption deadlines. The firm is of the view that the shares will remain within 15 percent of current levels over the next 12 months.

At time of writing, VeriFone shares were down 5.73 percent at $17.26.
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For VeriFone, Future Opportunities Outweigh Past Troubles

VeriFone Systems Shares Downgraded To Neutral At BTIG

Latest Ratings for PAY

DateFirmActionFromTo
Apr 2018JefferiesDowngradesBuyHold
Apr 2018Standpoint ResearchDowngradesBuyHold
Apr 2018JP MorganMaintainsNeutralNeutral

View More Analyst Ratings for PAY
View the Latest Analyst Ratings

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