Shares of Verifone Systems (PAY) were falling 18.91% to $16.30 on heavy trading volume Friday morning after the company posted lower-than-expected revenue for the 2016 fiscal third quarter and cut its full-year outlook.
Following yesterday's market close, the San Jose, CA-based electronic payment solutions company reported adjusted revenue of $493 million. Analysts were looking for revenue of $516 million.
Adjusted earnings of 42 cents per diluted share beat analysts' projections of 40 cents per share.
Verifone also cut its full-year earnings per share guidance to range between $1.64 and $1.65 on revenue of $2 billion vs. its previous guidance for earnings of $1.85 per share on revenue of $2.1 billion.
Analysts are forecasting earnings of $1.85 per share on revenue of $2.1 billion for fiscal 2016.
For the fiscal fourth quarter, Verifone projects adjusted earnings per share between 28 cents and 29 cents on adjusted revenue of $460 million. Analysts are expecting earnings of 50 cents per share on revenue of $536 million for the current period.
The stock was downgraded to "neutral" from "overweight" at Piper Jaffray this morning. The firm also cut its price target to $19 from $27.
Piper no longer expects a "meaningful recovery" in North America and does not project a return to total company growth until beyond fiscal 2017, the Fly noted.
Wedbush also slashed its rating on shares to "neutral" from "outperform" following the quarterly report. The firm lowered its price target to $20 from $30.
The firm does not believe investors will regain confidence until fiscal 2018 due to EMV upgrade headwinds in the U.S. and deteriorating conditions in emerging markets, the Fly said.
Stifel reduced its price target to $18 from $26 and maintained a "buy" rating on the stock. The firm said it was an "ugly quarter" and the "sharp" guidance cut raises serious questions about the company's strategic direction, according to the Fly.
About 4.58 million of the company's shares changed hands so far today vs. its average volume of 2.21 million shares per day.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C on the stock.
The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and notable return on equity.
But the team also finds weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and generally higher debt management risk.
By: Kaya Yurieff (The Street).
Photo: Business Wire.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
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