Why Blackhawk Network Holdings Inc (NASDAQ:HAWK) Is Ticking Up


Shares in prepaid payment network and gift card provider Blackhawk Network Holdings Inc (NASDAQ:HAWK) were bid up by investors Wednesday after the company declared results for its 2016 third quarter.

The stock closed at $34.09, up 6.76%, after trading 5.49 million shares.

The company posted EPS of $0.14 per share, down 18% from $0.17 per share reported in the year ago quarter. Revenues were $168.9 million, down 5% from $177.1 million in Q3 2015.

Blackhawk Network Holdings Inc (NASDAQ:HAWK) revenues impacted by EMV issues

According to the company, “the decrease was primarily in U.S. retail due to EMV-related sales restrictions on U.S. retail open loop gift card sales and lower Cardpool revenues, partially offset by revenue from the incentives segment including the acquisitions of extrameasures and Giftcards.com, and growth in the international segment.”

[New secure payment card requirements from Europepay, MasterCard and Visa stipulate that a failure to implement EMV in their point of sale systems by retailers by October 2015 would transfer the liability for fraudulent credit card payments from card issuers to the retailers. To safeguard themselves, retailers and distributors implemented certain restrictions on credit card purchases].

However the company reassured that the negative impact of EMV on US retail is largely expected to be a 2016 event and that by end October 2016 95% of its stores is expected to be compliant.

Company estimated that for Q3 the EMV impact was $13 million on adjusted operating revenues and $11 million on adjusted EBITDA.

According to TheStreet, for the full year 2016, analysts expect earnings of $1.57 per share on revenue of $936 million. Blackhawk guidance is for earnings per share between $1.45 and $1.64 on revenue of $897 million-$926 million.

Technically, Blackhawk is poised at its 200 day moving average though that line was taken out yesterday on an intraday basis when the stock touched a high of $35.24.

A close above $34.50 would imply a bullish change in trend.


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