How Will This Coverage Initiation Affect VeriFone Systems (PAY) Stock Today?

NEW YORK (TheStreet) -- Shares of VeriFone Systems Inc. (PAY)  had coverage initiated at Morgan Stanley (MS) with an "equalweight" rating and a price target of $35.

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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 increase in net income. However, as a counter to these strengths, we also find weaknesses including 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 16.4%. Since the same quarter one year prior, revenues slightly increased by 9.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 59.25% and other important driving factors, this stock has surged by 54.07% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • VERIFONE SYSTEMS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VERIFONE SYSTEMS INC swung to a loss, reporting -$2.71 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus -$2.71).
  • Net operating cash flow has decreased to $56.50 million or 28.61% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, VERIFONE SYSTEMS INC has marginally lower results.
  • 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.
  • You can view the full analysis from the report here: PAY Ratings Report

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