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VeriFone Systems Inc upgraded by Webush

Including Dundee Capital on Entrec and WesternOne, while Gold Newsletter's Brien Lundin looks at Endeavour Silver.
VeriFone Systems Inc upgraded by Webush
The broker’s price target for the stock rose to $36 from $35.

VeriFone Systems Inc (NYSE:PAY), the payment processing and point-of-sale technology group, has been upgraded by broker Wedbush.

The broker’s price target for the stock rose to $36 from $35, and an ‘outperform’ rating was repeated.

Wedbush’s upgrade comes after the group’s first quarter of 2016 beat expectations, with revenues rising 12% to $514mln versus a $501mln consensus forecast.

VeriFone upgraded its own expectations, raising the bar for 2016 full year revenue guidance to between $2.15bn and $2.17bn, up from $2.09-2.11bn.

And analyst Gil Luria highlighted that payment solutions for small businesses would create incremental opportunities.

“We believe growing SMBs will ultimately transition away from high-cost mPos solutions in favor of lower-cost traditional payment solutions and we expect PAY to capture an outsized proportion of this incremental share,” Luria said in a note.

“We believe three-part (phone+dongle+brick) solutions from the likes of Square have become more complicated to operate than a standard $200 countertop terminal.”

In New York, VeriFone Systems shares were up $2.23 or 8.17% each to $28.77.

Dundee Capital found “little incremental value” in Entrec’s (TSE:ENT) conference call yesterday, but its estimates remain intact for the cranes solutions provider.

Dundee had previously forecast underlying earnings (EBITDA) of C$18mln, down from $22mln in 2015. The broker holds the view that cranes will retain replacement values despite what its analysts called: “obvious asset under-utilization.”

Entrec’s balance sheet will not get worse, assured Dundee, citing C$20mln of incremental asset sales for 2016. To rebalance itself, Entrec would have to address the oil/supply demand dynamic, in Dundee's view.

Dundee reiterated a Buy recommendation with a C$0.60 price target for the end of this year.

However, the broker said it remained on the side-lines for WesternOne (TSE:WEQ), as it reiterated its Neutral stance and a C$0.40 valuation.

For the final quarter of 2015, EBITDA declined 22% year-on-year, while the consolidated EBITDA margin came in at 17.5% against its projection of 6.4%.

The group’s Britco business is in shrinking mode, with revenues down 74.3% year-on-year in the fourth quarter, contributing little to working capital, hence the cautious stance.

Brien Lundin, in this month’s edition of the Gold Newsletter, said Endeavour Silver Corp (NYSE:EXK,TSE:EDR) was a "hold that could quickly turn into a buy on either significant weakness or continued strength in the broader market."

A rally in precious metals drove Endeavour stock higher this past month, despite reduced production guidance. The group forecast that its three mines would produce between 7.9mln to 8.5mln oz of silver this year.

Management at Endeavour's El Cubo mine are considering whether to shut the persistently unprofitable site. Lundin said the plans allowed for some cash generation and still provided a way to benefit from rising metal prices.


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VeriFone Systems Timeline

May 25 2012

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