Susquehanna analyst says, “We are upgrading HPY to Neutral from Negative, as it has achieved our price objective. Although considerable risk persists related to the credit/debit card data breach disclosed last month, we believe such penalties are contemplated in the current valuation. We consulted a range of experts, including reformed hackers, data security auditors (PCI DSS), and competing ISOs. Although we think we understand the mechanics of a prospective penalty, these sources suggest a range of outcomes that is frankly too broad to reasonably base (from tens of millions to billions of dollars). It seems no one (outside the FBI and organized crime, perhaps) knows the extent of the breach (Did they get the coveted magnetic stripes? Was the data encrypted?) These details will likely dictate the penalties, the difference between going concern and back to business. We are reducing our estimates sharply on a “best guess” assumption regarding merchant flight, increased capex, and association penalties toward $25 mln.”
Source – StreetInsider.com