Robert W. Baird & Co. upgraded its rating on the transaction processor Heartland Payment Systems Inc., to "outperform" from "neutral."
In a note to clients, David Koning, an analyst at the Milwaukee investment bank, cited the merchant processor's small market share (2% to 3%) but aggressive pursuit of new merchants for its cards, payroll, and other payment services.
His Dec. 20 note said Heartland, of Princeton, N.J., could post organic revenue growth of 15% to 20% and earnings-per-share growth of 25% for the next several years as it expands its sales force.
Heartland sells its services directly to merchants, rather than processing on behalf of independent sales organizations, which often offer low promotional rates to new merchants and higher prices later, Mr. Koning pointed out.
"Given the fact that merchants often end up paying a higher fee with ISOs, we believe that Heartland has the opportunity to take share as it shows merchants that its pricing model is often lower than competitors," he wrote.
