UBS comments on First Data (NYSE:FDC) ahead the announced analyst and investor conference call announced last night:
- Firm thinks FDC's 3 segments are performing very well & they believe shares will benefit over the next 12 months from several catalysts (i.e. M&A, contract wins & a potential new CEO in 1H07). Since the threat of contract losses is fairly small, they reiterate their positive FDC thesis (strong growth/cash flow/leverage, favorable valuation, expansion opportunities).
They have changed their model to be in-line w/reported F06 numbers & F07 guidance (vs. prior pro-forma ests that included less debt expense). They have also removed M&A/new contract assumptions & tweaked some 1x/"below the line" items which were not related to FDC's core business. As a result, F07E EPS changed to $1.32 (from $1.47), but "core" net income growth remains an impressive 15%+.
UBS notes they are not changing their investment thesis at all. Firm continues to believe that
FDC's three main segments are performing very well and will meet and/or beat their respective F07 segment guidance (as FDC had indicated on the company's 3Q conference call). They would be extremely surprised if the company retreated on its prior commentary given it was only a few weeks ago and their businesses don't change that fast.
Firm thinks management has become increasingly frustrated by where the Street's estimates are for 2007 and while part of the blame lies with them and others, they also believe FDC did not provide enough specific information on "1x below the line" items until recently. Thinks FDC wants to set the record straight on where its expectations lie for next year. If there is anything more to the 8:30am EST conference call today, that would be a surprise to the firm.
Reits Buy and $30 tgt.
Notablecalls: I guess the timing of the management conference call came as a surprise for some and I would not be surprised to see some mkt participants get panicky. That may create a nice buying opporunity in the pre mkt ahead of the call. UBS' comments make perfect sense.
- Firm thinks FDC's 3 segments are performing very well & they believe shares will benefit over the next 12 months from several catalysts (i.e. M&A, contract wins & a potential new CEO in 1H07). Since the threat of contract losses is fairly small, they reiterate their positive FDC thesis (strong growth/cash flow/leverage, favorable valuation, expansion opportunities).
They have changed their model to be in-line w/reported F06 numbers & F07 guidance (vs. prior pro-forma ests that included less debt expense). They have also removed M&A/new contract assumptions & tweaked some 1x/"below the line" items which were not related to FDC's core business. As a result, F07E EPS changed to $1.32 (from $1.47), but "core" net income growth remains an impressive 15%+.
UBS notes they are not changing their investment thesis at all. Firm continues to believe that
FDC's three main segments are performing very well and will meet and/or beat their respective F07 segment guidance (as FDC had indicated on the company's 3Q conference call). They would be extremely surprised if the company retreated on its prior commentary given it was only a few weeks ago and their businesses don't change that fast.
Firm thinks management has become increasingly frustrated by where the Street's estimates are for 2007 and while part of the blame lies with them and others, they also believe FDC did not provide enough specific information on "1x below the line" items until recently. Thinks FDC wants to set the record straight on where its expectations lie for next year. If there is anything more to the 8:30am EST conference call today, that would be a surprise to the firm.
Reits Buy and $30 tgt.
Notablecalls: I guess the timing of the management conference call came as a surprise for some and I would not be surprised to see some mkt participants get panicky. That may create a nice buying opporunity in the pre mkt ahead of the call. UBS' comments make perfect sense.
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