Tough decisions ahead
Our detailed analysis paints a tough outlook for Ingenico and strategic choices need to be made to hit 2020 targets: i) In Terminals – lower unit growth and competitor catch-up will likely result in more price-led competition, especially as the mix moves more to emerging markets. We forecast high-single-digit unit growth but just midsingle- digit revenue growth and thus are below 2020 guidance. ii) In Payment Services – Ingenico will have to decide on its position in the value chain and its route to become a true global omni-channel provider. To achieve its goal of high-teens growth within ePayments it will have to step up innovation either via R&D or M&A. This will require bold strategic decision-making and in its absence growth will remain sub-par based on our estimates. The surprise US EMV slowdown caught us out and the stock is therefore largely reflecting our scenario. We lower our EPS estimates by -16% in 2017/18E and reduce our price target to €80 (from €120), placing the shares on 17x/15x 2017/18E P/E and 10x/9x EV/EBITDA - downgrade to Equal Weight.