CPI Card's Stock Plummets Toward Record Low As Disappointing Results Prompt a Downgrade

CPI Card Group Inc.'s stock plummeted 44% toward a record low in premarket trade Thursday, after the chip card maker missed profit and sales expectations, and provided a downbeat outlook. The disappointing results prompted analyst David Koning at Robert W. Baird to downgrade CPI to neutral from outperform, and cut the stock price target to $4 from $14. CPI reported late Wednesday earnings of $5.7 million, or 10 cents a share, compared with a loss of $6.4 million, or 16 cents a share, in the same period a year earlier. Adjusted earnings per share of 13 cents missed the FactSet consensus of 14 cents. Sales rose to $86.4 million from $77.3 million, but missed expectations of $88.2 million. For 2016, the company said it expects sales of $335 million to $355 million, well below the FactSet consensus as of the end of April of $436.4 million. The company blamed "much greater than anticipated" unissued card inventories at large issuers and evidence of "slower than anticipated" conversions for small to mid-sized issuers. "The magnitude of the guide down [for sales] leaves questions about whether there is any visibility," Koning wrote in a note to clients. The stock is changing hands at $4.10 ahead of the open, which is 57% below the initial public offering price of $10. CPI went public on Oct. 9, just eight days the use of chip cards was supposed to become a requirement.

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