VeriFone's (NYSE:PAY) Outlook Conservative Says Barclays (NYSE:BCS)

Commenting on VeriFone's (NYSE:PAY) guidance for 2011, Barclays (NYSE:BCS) said they see it as conservative, and reiterate their "Overweight" rating on the company.

Barclays said, "...Importantly, we continue to believe PAY's FY 2011 outlook is conservative: (1) We estimate that core business trends, excluding petroleum and taxi, would already get PAY close to its revenue growth guidance; (2) We suspect the potential increase in petroleum unit sales is not fully baked into guidance; (3) The taxi business continues to trend above plan; (4) Guidance only assumes a modest benefit from end-to-end encryption in the second half of 2011, whereas we expect considerable upside as the First Data partnership solidifies; (5) There may be incremental upside to services revenue from a GAAP change effective 1/1/11; (6) The HYC deal is not included in estimates or guidance despite an expected mid-year deal close, and we see $0.30-$0.50 annualized accretion as achievable; and (7) Gross margin is already trending above 40%, indicating a higher run rate into 2011 than we believe is incorporated in guidance. With trends accelerating in the core hardware and services businesses, the quarter increased our confidence in the sustainability of PAY's growth story, and we continue to highly recommend shares." (Raises FY11 EPS estimate from $1.66 to $1.78."

VeriFone soared Friday, closing at $39.87, up by $3.11, or 8.46 percent. Barclays raised their price target on them from $39 to $44. Volume was about 4 times the 3-month daily trading average.