Wednesday, May 20, 2009

EPIQ Systems (NASDAQ:EPIQ) : Upgraded to Buy at Keybanc

Keybanc is out with a pretty big call on EPIQ Systems (NASDAQ:EPIQ) upgrading the shares to Buy from Hold with a $17 tgt.

According to the firm the upgrade is based on recent data suggesting that momentum in EPIQ's bankruptcy segment could create meaningful revenue and EPS upside in the 2Q and 2009.

Last week, the firm noted that EPIQ won the Chrysler bankruptcy (Chapter 11) engagement, which was confirmed on the Company's web site. Moreover, data from U.S. courts indicates bankruptcy filings increased more than 60% year-over-year in the 4Q (December); they expect March quarter data to be available by the end of May. At an investor conference earlier today, CEO Tom Olofson commented that EPIQ has seen its Chapter 11 business "more than double" year-to-date, accelerating every month so far in 2009 up to 149% year-over-year growth in April. Firm believes strong bankruptcy momentum is sustainable for many quarters or years, as historical data suggests filings can continue to increase even after a recovery begins, and bankruptcy cases can take many years to complete.

Keybanc is raising their 2009/2010 EPS estimates while noting they think meaningful upside to their estimates is possible.

EPIQ's bankruptcy business appears to be growing faster than Keybanc previously forecast. Their checks and recent management commentary give them a more bullish outlook for EPIQ's bankruptcy business. EPIQ has been retained on 7 of the 10 largest Chapter 11 engagements of 2009, including the Chrysler and Thornburg Mortgage cases, which are the two largest restructurings of 2009.

Notablecalls: This call will likely generate some serious upside in EPIQ stock today and in the coming days. 'Meaningful upside to estimates is possible' is 6 words investors want to hear.

Thin name, though.

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