POSERA-HDX (TSX:HDX) is well positioned to penetrate the U.S. market by capitalizing on the migration of merchants towards EMV chip supported processors, says Global Maxfin Capital analyst Ralph Garcea.
On March 27th, POSERA-HDX posted is fourth quarter and fiscal 2013 results. For the year, the company earned $943,596 on revenue of $19.51-million, up 18.6% over 2012’s topline.
Garcea notes that the equipment component of the point of sale (POS) business is currently undergoing a “radical transformation”. He points to recent research from Mckinsey & Company that shows merchants and retailers are adopting cloud-based POS solutions, that mobile POS solutions are cannibalizing the sales of traditional systems, and that paper and plastic transactions are becoming digitized.
The Global Maxfin analyst says POSERA-HDX, has a seasoned management team that is well positioned to capitalize on the industry transformation that is currently happening. He says the recent acquisition of Zomaron, a private company whose solutions support EMV Chip and Pin technology will allow POSERA to hit the ground running in the U.S., where merchants have been slower to adopt the new technologies. An upcoming catalyst will take place in October of this year, when U.S. merchants that fail to support EMV chip processors will be held liable for fraudulent transactions.
Half of all credit card fraud worldwide takes place in the U.S.. The culprit is the old swipe-and-sign method, which is inherently unsecure.
In a research report to clients yesterday, Garcea initiated coverage of POSERA-HDX with a “Strong Buy” recommendation and a 12-month target price of $1.00, a target that implied a 246% upside from Wednesday’s share price.
At press time, shares of POSERA-HDX were up 6.7% to $0.32.