Needham & Company Cuts Price Target on Cubic Corp. (CUB) Following Negative 4Q Preannouncement
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Needham & Company maintained a Buy rating on Cubic Corp. (NYSE: CUB), and cut the price target to $45.00 (from $48.00), following the company's 4Q preannouncement. Revenues are expected to be 15-20% below prior expectations, with an impact on adjusted EBITDA. CUB's revised guidance implies FQ4 revenues of $380M-$400M and adjusted EBITDA of $30M-$38M, well below expectations.
Analyst James Ricchiuti commented, "CUB said FQ4 revs and adj. EBITDA will be significantly below expectations owing to DoD funding delays that impacted high-margin orders in its Mission Solutions and Training Systems businesses. Revs are expected to be 15-20% below prior expectations, with a meaningful impact on adj. EBITDA due to the margin profile of the business that was pushed out. Mgmt expects to receive the orders in F17, although we have tempered our expectations for the defense business over the next year. CUB’s Transportation business (~40% of revs) appears to have met expectations, and the next phase of its ERP rollout was completed earlier this month as planned with costs related to the ERP implementation also in line. We are maintaining our Buy rating based on expectations of significantly brighter EPS prospects in F17 and F18."
Shares of Cubic closed at $45.02 yesterday.
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