Pacific Crest Upgrades LogMeIn (LOGM) to Overweight

Pacific Crest upgraded LogMeIn (NASDAQ: LOGM) from Sector Weight to Overweight with a price target of $82.00. Analyst Ben McFadden thinks a recent pullback has created a compelling opportunity and he is increasingly confident FCF can drive share appreciation.

"LogMeIn has seen strong up-sells and renewals after discontinuing stand-alone LogMeIn Free, which is driving recent billings strength, and we are increasingly confident in the run-rate of the company's more traditional businesses such as Rescue, Boldchat and LogMeIn Pro. Also, Central is likely to continue to see a tailwind from recent changes to more tiered pricing. Further solid low- to mid-teens run-rate growth from these core businesses would likely produce a positive outcome for investors," said the analyst.

"We believe recent strength in renewals and solid execution on traditional businesses should continue to drive strong results as join.me ramps to a larger portion of the mix, and estimates appear conservative relative to the opportunity. We do expect the company to guide margins lower in 2016 versus 2015, but Street models already reflect this with consensus at 20%. We are lowering our operating margin estimates to reflect a similar outlook but increasing FCF on improved billings outlook. Given a near-term opportunity for LogMeIn to sustain revenue growth near 20%, we see upside to $82, or 24x EV-to-2016 estimated FCF," McFadden added.

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

Shares of LogMeIn closed at $64.39 yesterday.

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