Nomura Securities Reiterates Buy on Total System Services (TSS)
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Nomura Securities reiterated a Buy rating and $58.00 price target on Total System Services (NYSE: TSS). An analysis showed that FY17 could see a sizable re-acceleration helped by waning headwinds, easing compares and cross-selling. Nomura is expecting a better than expected ex. de-conversion FY17 growth potential of +9% vs. the consensus of +6%.
Analyst Dan Dolev commented, "Beset by decelerating organic growth in North America (~40% of rev.), anniversary of BofA/EMV, prepaid de-conversion headwinds, and a looming CFPB overdraft rule, the stock’s poor performance YTD (-10% rel. to the S&P) is somewhat understandable. But is current performance indicative of future results? Our analysis shows that FY17 could see sizable re-acceleration helped by waning headwinds, easing compares and cross-selling. At NetSpend, the CFPB dragging its feet on the overdraft rule allows TSS to explore offsetting revenue streams. Plus, a well-communicated worst-case EPS drag may in fact culminate in a sigh of relief when the rule is announced. FY16 would likely be remembered as a rank and file year, but it also sets the stage for a favorable future risk/reward. Raising Est. Buy."
Shares of Total System Services closed at $46.72 yesterday.
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