Point-of-sale terminal manufacturer VeriFone Systems saw its shares fall more than 12% yesterday after Deutsche Bank questioned its organic growth figures and downgraded its stock.
Deutsche Bank analyst Bryan Keane downgraded the vendor from a hold rating to sell and lowered the price target on its stock to $40 from $44, stating in a note to clients: "We believe the 11.8 percent organic growth stated on the 1Q12 earnings call significantly exaggerates the 'true' flat 1Q12 organic growth."
The note prompted VeriFone shares to close the day down $6.80, or 12.49%, at $47.64 on the New York Stock Exchange; its biggest fall since March 2009, according to Bloomberg.
VeriFone hit back at the Deutsche Bank analysis, issuing a statement reaffirming its expectations for 10% to 15% organic growth rates for fiscal 2012.
"Deutsche Bank is choosing to include in its calculation the revenue of acquired companies as if VeriFone had owned them for the entire current and year-ago period. We believe this does not reflect the true organic results," says the firm.
Andrew Jeffrey, a SunTrust Robinson Humphrey analyst has disagreed with the Deutsche Bank note, telling Bloomberg that "VeriFone has been our top pick this year, and we are standing by it".
He argues that VeriFone is well placed to benefit from a Visa and MasterCard-driven shift in the US from mag-stripe to EMV cards as well as the arrival on the scene of a plethera of new mobile payments players, such as Google and Isis, both of which it has deals with.