Verifone Reports Solid Results (PAY)

Goldman Sachs published its research report on VeriFone Systems PAY following PAY's solid results across the board. In a report sent to clients, Goldman Sachs writes, "PAY reported F4Q10 GS-defined EPS of $0.23 (-23% yoy), above our $0.22. Excluding stock-based comp and amortization of purchased intangibles, management defined adjusted EPS was $0.40 (-17%), above consensus of $0.36. Earnings upside was driven by higher-than-expected revenue/gross margins of $276 mn/37.6% vs. our forecast of $263 mn/36.3% as well as a favorable tax rate. The company provided FY11 revenue and management defined EPS guidance of $1,130 mn to $1,150 mn and $1.60 to $1.70, respectively. We are raising our FY11/FY12/FY13 GS-defined estimates to $1.40/$1.59/$1.81 from $1.24/$1.38/$1.59 to reflect better revenue growth, margin expansion, and improved international growth trends. Our new 12- month price target is $34 (+$3, 7% downside)." PAY is trading at $36.76.