VeriFone Shares Likely To Remain Range-Bound Near Term, Says Barclays

Shares of VeriFone Systems Inc (NYSE: PAY) are likely to remain range-bound near term due to a negative guidance revision and lack of visibility, Barclays said while reiterating its Equal-Weight rating on the stock.

The shares are set to open on a new low after the company's third quarter top-line trailed estimates despite a bottom-line beat. In the pre-market hours, VeriFone shares plunged 16.27 percent to $16.83, a new 52-week low for the stock.

"While EMV adoption has been below company expectations, particularly amongst SMB businesses, macro pressures across Turkey and Latin America also pressured top-line results in 3Q, causing a shortfall relative to our expectations ($493 million vs. our $512 million)," analyst Darrin Peller wrote in a note.

VeriFone lowered its FY16 guidance, calling for net revenue of $2.0 billion and EPS between $1.64 and 1.65, down from prior guidance of $1.85 and the Street estimate of $1.85.

The fourth-quarter outlook includes non-GAAP net revenue of $460 million and EPS of $0.28–$0.29 (vs. consensus of $536 million and $0.50).

Related Link: Piper Jaffray Downgrades VeriFone Systems To Neutral

Looking ahead, the company expects consolidated revenues to fall 3 percent year-over-year in FY17 on SMB/EMV shortfalls. Prior consensus estimates called for a 5 percent increase in revenues in FY17 from FY16.

"We note that this is the second consecutive quarterly guidance revision, underscoring the lack of visibility," Peller highlighted.

Meanwhile, the analyst cut his full-year EPS estimate to $1.64 from $1.85. Peller also trimmed his price target by $2 to $19, based on a multiple 11x his new CY17 EPS view of $1.74.

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