Jack Henry Shares Dip On Lower FY21 Guidance

Shares of Jack Henry & Associates dropped over 7% in morning trading after it reported lower-than-expected 2Q sales. The payment processing company’s FY21 (ending June 21) guidance also fell short of analysts’ estimates.

Jack Henry (JKHY) posted 2Q revenues of $410.5 million versus analysts’ expectations of $413.1 million. Meanwhile, earnings of $0.80 per share came ahead of Street estimates of $0.78. Adjusted operating income decreased 2% year-over-year, due to a slower growth rate of processing revenue amid the COVID-19 pandemic.

For fiscal 2021, Jack Henry forecasts earnings of $3.70-$3.75 per share, lower than the Street consensus of $3.84 per share. The company expects FY21 revenue of $1.75-1.77 billion, compared with the $1.7 billion estimated by analyts.

Following the results, Raymond James analyst John Davis maintained a Buy rating on the stock. Davis noted that he was “rather underwhelmed” by JKHY’s F4Q20 print that included a modest top-line shortfall and more importantly a disappointing initial FY2021 guide.” However, the analyst was encouraged by the monthly sales record in June. “On the bright side, F4Q set a quarterly bookings record and June set a monthly record,” he added.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 1 Buy and 3 Holds. Given the year-to-date stock price gain of 36.4%, the average price target of $194 now implies a more modest upside potential of 5.8%. (See JKHY stock analysis on TipRanks).