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Financial technology company Evertec (NYSE:EVTC) was downgraded at Susquehanna to Negative from Neutral on margin pressure, with the price target reduced to $28.00 from $38.00.
“Appropriately, the company has been expanding its TAM (Total Addressable Market) beyond its heritage relationship with its former parent Banco Popular and is traveling outside the borders of its native Puerto Rico. But SFG believes this transition is likely to pressure margins, potentially moving below levels contemplated by consensus,” analysts led by James Friedman said in a research note.
“EVTC is likely to face negative leverage over the next few years, with its lowest margin region – Latam – growing fastest,” the note added.
“Brazil in particular is an especially competitive Fintech market, where their beachhead Sinqia faces speed bumps and incumbent margins are materially lower than corporate EVTC margins,” said the note.
Evertec shares were trading 6.58% lower Thursday noon at $31.51.
Susquehanna’s rating contradicts the average sell-side analyst and Quant rating of Hold.
