(Adds share prices, analyst comments)
SAO PAULO, July 31 (Reuters) - Shares in Brazilian card processor Cielo SA tumbled 10 percent on Tuesday, their steepest one-day decline in eight years, a day after the company reported earnings that missed analysts' expectations due to fierce competition.
Investor relations director Victor Schabbel said on Tuesday on a call with analysts that Cielo expected to raise its net income over the next year by 5 percent to 10 percent and Chief Financial Officer Clovis Poggetti said margins should start improving in the fourth quarter.
"Despite the larger-than-expected dividend announced, big challenges ahead mean we remain cautious," BTG Pactual analyst Eduardo Rosman wrote in a note to clients.
Earlier in July, Eduardo Gouveia resigned as chief executive officer 18 months after taking reins of the payment processor, citing personal and family reasons. Cielo is still mulling options for a new CEO.
"We believe it is still too early to call the bottom," Goldman Sachs analyst Carlos Macedo said in a note to clients, adding that, in addition to competition, the company has to deal with a "vacuum in leadership".
Cielo has increased marketing expenses to fend off competition from newcomers such as PagSeguro Digital Ltd and Stone Pagamentos SA.
The pressure has cut Cielo's market capitalization by nearly 40 percent this year to 43.2 billion reais ($11.5 billion) on Tuesday.
$1 = 3.7542 reais Reporting by Aluisio Alves and Carolina Mandl Writing by Tatiana Bautzer Editing by David Gregorio and Alistair Bell