Citigroup Maintains On VeriFone Following Earnings Report, 2015 Guidance

Philip Stiller of Citigroup on Tuesday maintained a Neutral rating on VerifFone Systems Inc (NYSE: PAY) after the company reported what the analyst describes as “another strong” quarter but a “mixed” fiscal 2015 guidance.

The company earned $0.44 per share in the fourth quarter, beating the consensus estimate by $0.03 while revenue of $491 million came in 2 percent higher than expected. The company is now projecting 8 percent to 9 percent revenue growth in fiscal 2015, in-line with expectations. However, the company is projecting its EPS for the coming year to be $1.85 to $1.90, $0.10 below prior consensus estimates.

“On the positive front, the revenue guidance was in-line despite greater FX headwinds given the building momentum, particularly in the U.S.,” Stiller wrote. “However, earnings per share guidance was approximately $0.10 lower at the midpoint, implying lower margins on some negative mix effects for gross margins and a continued ramp of investment to support product initiatives and business transformation.”

Stiller adds that given the company's track record of exceeding EPS expectations, shares would react favorably to the headline numbers but a ramp of investments may limit upside. The analyst states that for the second straight quarter, he is making no changes to his fiscal 2015 EPS estimates of $1.95, which is “tough for the stock given that it is an earnings per share recovery story.”