Total System shares fall in wake of earnings

NEW YORK -- Shares of Total System Services Inc. fell nearly 4 percent Wednesday as analysts said third-quarter results for the electronic payments processor appeared to be in line with expectations but noted some potential negative factors.

THE SPARK: On Tuesday, Total System Services reported third-quarter earnings of 32 cents per share on $406 million in revenue. The results were in line with expectations and the company affirmed its outlook for the year.

Janney's Thomas McCrohan and Leonard DeProspo said Total System's latest results for North America and international operations were mixed, and said growth in revenue for the North American business came in below their expectations.

THE BIG PICTURE: Los Angeles-based Total System's customers include financial institutions and retail companies, which were hit very hard during the economic downturn. The company provides credit, debit, health care and other payment services.

THE ANALYSIS: Sterne Agee analysts Greg Smith and Jennifer Dugan maintained their estimate for 2012 earnings at $1.30 per share, while the Janney analysts kept their estimate at $1.28 per share. Susquehanna maintained its estimate at $1.29 per share. Sterne Agee's 52-week price target is $28; Janney's is $23.03.

Analysts noted that Total System has about 100 million payment cards under contract to convert to its processing over the next two years or so.

SHARE ACTION: Total System shares fell 86 cents, or 3.7 percent, at $22.17 in afternoon trading. They have traded between $18.72 and $25.06 over the past 52 weeks.