VeriFone Jumps to Profit in Q1; Stock Surges 9%

Shares of VeriFone Systems

were surging on Wednesday after the company reported a profit for its fiscal first-quarter. The stock had plunged on February 21, after the company issued a profit warning. VeriFone said that its results would be effected by poor conditions in Europe, lower than expected revenue from Brazilian customers and political and economic uncertainty in Venezuela. Despite Wednesday's rally, PAY is still down almost 40 percent over the last month alone. Due to continued headwinds for the company's business, VeriFone cut its earnings and revenue guidance for fiscal 2013. For the first-quarter, VeriFone reported net income of $11.8 million or $0.11 per share, compared to a net loss of $3 million or $0.03 per share, in last year's corresponding quarter. On an adjusted basis, earnings were $56 million or $0.51 per share, versus $64 million or $0.58 per share, in last year's first-quarter. This beat Wall Street analysts' consensus EPS estimates of $0.48. Net revenue in the period was up 2.2 percent to $429 million from $420 million last year. On an adjusted basis, revenue grew 1 percent to $430 million. This also beat Wall Street consensus revenue estimates of $426.17 million. For the fiscal second-quarter, the company guided for adjusted earnings per share of $0.45 to $0.50 on revenue of $435 million to $450 million. This compares to current consensus estimates of $0.48 per share on revenue of $440.35 million. For fiscal 2013, VeriFone lowered its EPS and sales guidance to a range of $1.90 to $2.10 on revenue of $1.80 billion to $1.83 billion. Previously, VeriFone had guided for EPS of $3.25 to $3.30 per share on revenue of $2.05 billion to $2.10 billion. The current guidance compares to analysts' consensus of $2.11 per share on revenue of $1.81 billion for fiscal 2013. The rally in VeriFone on Wednesday comes as the company's Q1 results and outlook were slightly better than investors had feared. The company's forward looking outlook and last month's profit warning highlights the headwinds that VeriFone faces, and the jump in the stock is the result of bargain hunting from investors. Over the last year, PAY has fallen almost 58 percent, and the stock could continue to face more pressure going forward.