Identifying Key Positives And Risks For Verifone After Its Q4 Report

Shares of VeriFone Systems Inc PAY gained more than 8 percent Tuesday after the company reported fourth quarter results ahead of expectations.

Bryan Keane of Deutsche Bank maintained a Hold rating on Verifone with an unchanged $15 price target.

The analyst highlighted a few negative trends in the quarter, such as a 26 percent decline in North American revenue to $171 million, a 19 percent organic decline in revenue generated in Asia and a 440 basis point decline in operating margins to 10.4 percent.

The Positives

Keane also highlighted a few positive developments in the quarter, specifically: 1) Service revenue rose 16 percent and was driven by acquisitions and new business in Latin America, 2) The Point business in North America saw an 80 percent year-over-year growth and petro installations, 3) EMEA revenue grew 10 percent year-over-year to $181 million, 4) Latin American revenues grew 9 percent year-over-year despite macro challenges, 5) While Asia was indeed challenged during the quarter the company is in the process of launching new value priced products in China.

Bottom Line

Keane also noted that Verifone expects to see revenue growth in fiscal 2018 and beyond and the company will provide details in January at an analyst day presentation. Nevertheless, the analyst believes that for the time being, "visibility is limited."