Thursday, October 23, 2014
"There is significant market opportunity in this space," Zacks said. "There has been a channel shift to third-party gift cards with the creation of 'destination card malls.' There is expanding 'self-use' of gift cards and growth in prepaid telecom products as well. New innovations allow for digitalization of gift cards and wallets through online and mobile use. Also, incentives and rewards are shifting from physical and travel products to gift cards. Blackhawk estimates the total addressable prepaid market at $221 billion per year, over 22 times the size of HAWK's footprint today."
Zacks noted that Pleasanton, Ca-headquartered Blackhawk has a distribution network of 21 countries and over 400 distribution partners. Additionally, Blackhawk operates a proprietary platform for activation, processing and settlement of prepaid cards. "From 2009 to 2013 the company had a CAGR on Operating Revenue of 26% and on EBITDA of 28%, making it a huge growth stock in the making," Zacks said. "In 2013 alone, Blackhawk processed 242 million load transactions and $10 billion in load value."
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