NEW YORK (TheStreet) -- VeriFone Systems (PAY shares are up 1.3% to $34.25 in pre-market trading on Friday after having its price target raised to $36 from $31 by analysts at Piper Jaffray (PJC - Get Report).
The firm upped its outlook following yesterday's release of the company's second quarter earnings results in which the company posted revenue of $466.8 million and an EPS of 37 cents per diluted share, both ahead of analysts expectations.
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Separately, TheStreet Ratings team rates VERIFONE SYSTEMS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate VERIFONE SYSTEMS INC (PAY) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 16.5%. Since the same quarter one year prior, revenues slightly increased by 1.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, PAY's share price has jumped by 41.34%, exceeding the performance of the broader market during that same time frame. Although PAY had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, VERIFONE SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $31.90 million or 40.29% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: PAY Ratings Report