Benefitfocus (BNFT): Positive FCF in '18 - Jefferies

August 12, 2016 8:43 AM EDT
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Price: $35.80 -1.51%

Rating Summary:
    6 Buy, 3 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 17 | Down: 26 | New: 7
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Jefferies analyst, John DiFucci, reiterated his Buy rating on shares of Benefitfocus (NASDAQ: BNFT) after hosting investor meetings with head of IR Michael Bauer. Major themes of the conversations included cash flow expectations, balance between future growth and profitability, sales structure, partnership updates, cross selling opportunities, and the CFO search progress. The analyst is extending his model to 2018, when he estimates FCF will turn positive.

about 25% of the direct Large Employer sales team was refocused on National Accounts (>10k employees/ lives). Management expects to more than offset the recent decline to the Large Employer sales team with new hires in the near term to prepare for 2017 open enrollment. Additionally, they also anticipate growing both the National accounts and back to base sales teams given the current market demand.

Management noted multiple drivers of growth including larger deal size, additional product sales and an improving carrier business. While Management expects strong sustained growth, they remain cognizant of profitability goals of investors such as free cash flow and adj. EBITDA, and expect to witness gross margin expansion and operating leverage with economies of scale, increasing partner roles, and cross selling.

The price target increases to $50 from $45.

For an analyst ratings summary and ratings history on Benefitfocus click here. For more ratings news on Benefitfocus click here.

Shares of Benefitfocus closed at $42.03 yesterday.

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