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On Thursday, Susquehanna analyst James Friedman shifted his stance on EVERTEC (NYSE:EVTC) stock, upgrading the rating from Negative to Neutral and increasing the price target to $30 from $28. The decision reflects the analyst’s observation of the company’s effective cost management strategies in the face of ongoing challenges. According to InvestingPro data, EVERTEC currently trades at a P/E ratio of 24.65x and shows strong financial health with a current ratio of 1.97, indicating solid liquidity.
Friedman noted that EVERTEC’s previous downgrade was based on the expectation of margin pressure, particularly due to the financial impact of expanding into Latin America and the renewal of the BPOP contract, which could potentially cost the company an additional $18 million into 2026. Despite these challenges, EVERTEC’s proactive measures in managing other costs have shown resilience, prompting the upgrade. The company’s revenue growth of 24.45% in the last twelve months and gross profit margin of 51.31% demonstrate its operational strength.
According to Friedman, EVERTEC’s management has demonstrated a commitment to driving efficiency within the business to counterbalance expected profitability headwinds. The company has been implementing various strategies, such as renegotiating with suppliers, being more deliberate with corporate spending, and making adjustments to headcount and responsibilities.
While acknowledging that the company is taking sensible initial steps to address the issues, Friedman also pointed out that inverse leverage is an ongoing and structural concern. He cautioned that cost-cutting measures have their limits in combating such fundamental challenges.
Interested parties were invited to contact Susquehanna directly via email to obtain a copy of the callback notes that delve deeper into the analysis. The upgrade and new price target suggest a modestly improved outlook for EVERTEC, as the company adapts to its financial landscape and strives to maintain its operational efficiency.
In other recent news, Evertec Inc . reported its fourth-quarter and full-year 2024 financial results, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $0.87, compared to the forecasted $0.72, while revenue reached $216.4 million, exceeding the anticipated $215.29 million. For the full year, Evertec’s revenue grew by 22% year-over-year to $845.5 million, with adjusted EBITDA rising by 17% to $340.2 million. The company’s expansion in Latin America contributed significantly to its revenue, now accounting for 33% of the total. Evertec has been actively pursuing strategic acquisitions, including the integration of Cinqia, which has started to show growth reacceleration. Looking ahead, Evertec projects revenue between $889 million and $899 million for 2025, with anticipated adjusted EPS growth of 1.8% to 5.2%. The company remains focused on organic growth and margin optimization, with continued efforts in strategic mergers and acquisitions.
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