EVO Payments Inc (NASDAQ: EVOP) stock fell 4.6% on June 19th, 2018 though there are different views on the company. BofAMerrill Lynchh has initiated coverage on EVO Payments with a Neutral rating and a price target of $25.00. Robert Napoli of William Blair initiated coverage on EVO with an Outperform rating. As per William Blair, the company’s strong organic growth outlook, free cash flow generation and M&A prospects give the stock a high risk-reward profile at current trading multiples. Strong secular tailwinds, including the shift to electronic payments along with EVO’s exposure to high-growth markets should drive low double-digit to mid-teens revenue growth. As per Napoli, EVO’s margin expansion target of 50-75 bps per year appears reasonable, as the company’s internal initiatives such as platform consolidation efforts, improved procurement and the integration of acquired businesses will drive “sustainable improvement. Further, the company’s strong free cash flow generation will likely be used to deleverage or support acquisitions, which will continue to drive growth. Consistent with the company’s history, the analyst believe M&A will remain a key strategy for management and will supplement organic growth.
Meanwhile, EVOP has successfully completed an amendment to its Senior Secured Credit Facility. Under the terms of the amended agreement, the company has reduced the interest rate spread on its first lien term loan by 75 basis points. The agreement also provides for a further 25 basis point reduction when the company receives an upgrade to its credit rating. The amendment also increased the company’s revolving credit facility to $200 million and reduced its interest rate spread by 100 basis points (subject to adjustment based on an amended leverage-based pricing grid). After the May 2018 public offering of EVO Payments, Inc., EVOP has repaid its $175 million second lien term loan and the remaining balance of the deferred purchase price from its acquisition of Sterling Payment Technologies.
On the other hand, EVOP stock had risen approximately 26 percent in their debut on. The company had offered 14 million Class A shares and raised $224 million in the IPO, after being priced at the upper-end of its projected range. The company had planned to use proceeds from the IPO for buying a 19.8 percent economic interest in parent company EVO Investco LLC, through which the firm will operate and control all of the business and affairs of the parent.
EVO Payments has an average rating of “Hold” and a consensus price target of $23.86.