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Stifel Downgrades VeriFone Systems to ‘Hold’

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Dec. 5 2016, Published 5:14 p.m. ET

Price movement

VeriFone Systems (PAY) has a market cap of $1.7 billion. It fell 4.6% to close at $15.52 per share on December 2, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -12.6%, -1.3%, and -44.6%, respectively, on the same day.

PAY is trading 7.7% below its 20-day moving average, 4.1% below its 50-day moving average, and 26.9% below its 200-day moving average.

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Related ETF and peers

The Schwab US Broad Market ETF (SCHB) invests 0.01% of its holdings in VeriFone Systems. The YTD price movement of SCHB was 9.6% on December 2.

The market caps of VeriFone’s competitors are as follows:

  • PayPal Holdings (PYPL) — $46.6 billion
  • Global Payments (GPN) — $10.5 billion
  • NCR Corporation (NCR) — $4.8 billion

VeriFone’s rating

On December 2, 2016, Stifel downgraded VeriFone Systems’s rating from “buy” to “hold.” It also reduced the stock’s price target to $15.00 from $18.00.

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Performance of VeriFone in 3Q16

VeriFone Systems (PAY) reported total 3Q16 net revenues of $488.1 million, a fall of 4.3% compared to its total net revenues of $509.9 million in 3Q15. Net revenues from its North America, Latin America, and Asia-Pacific segments fell 8.2%, 25.2%, and 6.4%, respectively. Net revenues from its EMEA (Europe, the Middle East, and Africa) segment rose 10.1% in 3Q16 compared to 3Q15.

PAY’s gross profit margin contracted 3.3% in 3Q16 compared to 3Q15. The company reported a litigation settlement and a contingency expense loss of $0.6 million in 3Q16.

VeriFone’s net income and EPS (earnings per share) fell to -$31.1 million and -$0.28, respectively, in 3Q16, compared to $9.5 million and $0.08, respectively, in 3Q15. It reported non-GAAP[1. generally accepted accounting principles] EPS of $0.42 in 3Q16, a 10.6% fall compared to 3Q15.

VeriFone’s cash and cash equivalents fell 25.0%, and its inventories rose 41.2% in 3Q16 compared to 4Q15.

Projections

VeriFone (PAY) made the following projections for 4Q16:

  • non-GAAP net revenues of $460.0 million
  • non-GAAP EPS of $0.28–$0.29

The company made the following projections for fiscal 2016:

  • non-GAAP net revenues of $2.0 billion
  • non-GAAP EPS of $1.64–$1.65

Next, let’s discuss Tyson Foods (TSN).

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