Brean Capital Reiterates Buy on Pitney Bowes (PBI) Following Earnings Report and Sell Off
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Brean Capital maintained a Buy rating on Pitney Bowes (NYSE: PBI), and cut the price target to $20.00 (from $24.00), following the company's earnings report and recent sell-off (18%). PBI reported revenue and EPS of $839M and $0.44, both missing the Street's estimates of $856M and $0.46, respectively.
Analyst Ananda Baruah commented, "We believe that the biggest reason the stock was off so dramatically yesterday (18%) is because with a $0.07 tax benefit, PBI essentially put up a $0.37 operational Q vs. Street at $0.46. While PBI had its share of operational challenges this Q, we also note that 1) Street was much higher than our $0.40 (as PBI doesn't guide Q's) and 2) for FY16, Street was in line with us for FY16 at $1.75, which is what PBI reiterated. As such, we believe that PBI suffered to the tune of $0.03 - $0.05 unexpected impact from ongoing "clunkiness" in its transition both to a new sales model in the traditional business (this Q manifesting in Supplies) and from the implementation of its Enterprise Platform, which this Q impacted the timing of payments for its Financing business. Each of these are very high margin. PBI believes that exiting Dec they will have resolved the Financing issue and that they will experience in the Supplies selling during the next 2 - 3 Q's. Additionally, we note that PBI absorbed $0.03 of negative tax impact 1H16, so net it has a $0.04 tax benefit thru 3Q's, or just >$0.01 / Q. Our $20 TP is 11x our CY17 EPS of $1.80, the lower end of PBI's 10x - 14x "stabilized model" EPS range"
Shares of Pitney Bowes closed at $14.54 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
Related EntitiesEarnings, Brean Capital
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