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FBR Capital Reiterates Market Perform on Ultimate Software Group (ULTI) After Meeting with management

November 12, 2015 7:06 AM EST
Get Alerts ULTI Hot Sheet
Price: $331.36 --0%

Rating Summary:
    15 Buy, 17 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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FBR Capital reiterated a Market Perform rating and $205.00 price target on Ultimate Software (NASDAQ: ULTI) after meetings with management. the meetings largely focused on the company's longer-term growth opportunities, execution strategy, and financial targets. A key driver of ULTI's consistent, mid-20% recurring revenue growth has been increasing the per-employee per-month (PPM) fee it can generate. The current maximum PPM ULTI charges is $30, which has increased significantly from $5 when the subscription offering was first introduced.

Analyst Samad Samana commented, "Earlier this week, we held meetings with Ultimate Software's CFO Mitch Dauerman and investors. With the company having reported solid 3Q15 results on October 27, the meetings largely focused on the company's longer-term growth opportunities, execution strategy, and financial targets. While many topics were discussed, we found the following recurring themes worth highlighting: (1) expanding the per-employee revenue opportunity is a top priority; (2) healthy margins allow the flexibility to accelerate investments; and (3) increased sales capacity and partnerships are keeping the pipeline full. Overall, we walked away from the meetings with confidence that ULTI can deliver on the rare combination of accelerating organic revenue growth and expanding margins in 2016. We maintain our Market Perform rating and our $205 price target, which represents an 8x EV/ revenue multiple using our 2016 estimates."

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

Shares of Ultimate Software closed at $205.07 yesterday.



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