Analysts Predict Blackhawk Network Poised For Future Growth


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Blackhawk Network Holdings (NASDAQ: HAWK ) is the largest distributor of prepaid gift cards, representing over 500 brands in more than 100,000 locations. Gift cards are sold primarily in grocery and convenience stores, with nine of the top ten grocery stores as distributors.

Before the IPO in April, Blackhawk was entirely owned by Safeway (NYSE: SWY ), which still controls a considerable amount of the company. Although shares spiked when first offered, they have dropped almost five percent since since the IPO.

Despite this decrease in share price, analysts are largely bullish on the company. On Tuesday, Deutsche Bank, Piper Jaffray, Goldman Sachs and Bank of America initiated coverage on the company with three positive ratings, and one neutral, respectively. Price targets range from $27.00 to $29.00.

Analysts cited growth in distribution channels and content as primary reasons for expansion. One way Blackhawk plans to further penetrate domestic distributors and retailers is by expanding the use of loyalty programs. In addition, the company is adding content from local and regional merchants, a market with notably higher margins.

In addition to these growth opportunities, analysts predict significant international expansion as more than 80 percent of the company's revenue is from the United States

Shares closed down Tuesday at $24.70.

(c) 2013 Benzinga does not provide investment advice. All rights reserved.

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