Jefferies Reiterates Buy on Blackhawk Network (HAWK); Sees Upside to 2017 Estimates
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Jefferies reiterated a Buy rating and $43.00 price target on Blackhawk Network (NASDAQ: HAWK). Following the EMV fraud liability shift last year, HAWK's grocery distribution partners started seeing elevated levels of counterfeit card fraud. However, management has sounded very confident that sales lost to EMV will rebound to prior levels over time. an analysis shows that, if 50% of card sales lost to EMV return, this would translate to $0.17 (6%) of upside to 2017 Street estimates, while if 100% were to come back this would mean $0.37 (13%) of upside.
Analyst Ramsey El-Assal commented, "We see upside to HAWK's 2017 estimates as some portion of revenue and profit lost to EMV in '16 should flow back in next year (see proprietary scenario analysis on page 10). While the timing of EMV compliance in HAWK’s retailer base, and the rate at which revenue returns is difficult to pin down, we believe the longer-term opportunity remains intact, and reiterate our Buy rating."
Shares of Blackhawk Network closed at $31.83 yesterday.
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