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Notice EVERTEC Stock (EVTC)?

Shares of EVERTEC, Inc. (EVTC) saw a rise in trading volume to 536 million on Friday, vs. average trading volume of 366 million. The electronic payments company has gained prominence, because of its unique focus on Latin America, where rising cash-to-card conversion is fueling growth for the electronic payments market.

An end-to-end transaction processor, Evertec manages a system of electronic payment networks that process more than two billion transactions annually. Based in Puerto Rico, the company enjoys a commercial presence in 26 Latin American countries.

Penetration of electronic payments is lower in Latin American markets in which the company operates vs. the mature U.S. and European markets. However, with rising smartphone usage, the unbanked and under-banked population in these markets is expected to shrink, creating growth opportunities for the company. Evertec also sees business growth potential in upgrading outdated, legacy IT infrastructure of small- and mid-sized enterprises across Latin America.

Long-term contracts with merchants, companies, financial institutions Governments constitute the revenue base for Evertec, which grows through partnerships and acquisitions. Most recently, the company announced the acquisition of PlacetoPay, a gateway and payment service provider primarily in Colombia and Ecuador. A Tax grant in place through 2026 with approximately 4% tax rate applicable to about 70% of revenue base is yet another advantage for the company.

In a November investor presentation, the company said it continues to benefit from the economic revitalization of Puerto Rico, and its transition from licensing products to processing products.

Risks include, the Puerto Rican government's debt crisis, which may impact the company's receivables with the government, although the company says there are no significant repercussions until date. Besides, the company also said it will continue to experience a revenue attrition of approximately $2 million to $3 million in Latin America, due to expected and previously disclosed client migration.

Evertec is also negotiating with former parent and largest client Popular in connection with a pricing disagreement under a 15-year Master Services Agreement or MSA. For the nine months ended September 30, 2019, Popular generated 43% of total revenues for the company.

In its Q3 earnings announcement, the company raised slightly the lower end of its FY19 outlook and now sees revenues of $479 million to $482 million and adjusted eps of $1.95 to $1.98, from prior expectations of $477 million to $482 million, and $1.92 to $1.98, respectively. Analysts are currently modeling revenues and eps at high end of expectations.

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