WageWorks (WAGE): Organic Growth Drives Upside, Raising PT - Needham
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Needham & Company analyst, Mayank Tandon, reiterated his Buy rating on shares of WageWorks (NYSE: WAGE) after the company beat consensus estimates on both revenue and EPS. Favorable trends in the consumer-directed benefits space remain in place as reflected by continued strength in organic growth in the core healthcare, commuter, and COBRA segments, which is expected to accelerate in the back-half of the year. Management reaffirmed guidance for the full year but introduced guidance for 3Q that is below consensus, mainly due to start-up costs related to the large Federal Government contract with the Office of Personnel Management (OPM) which goes live on September 1 and seasonal impacts.
Despite the near term reduction in expectations, the analyst raised his price target to $65.00 (from $60.00) based on 6x EV/FY17 revenue and 18x EV/FY17 EBITDA,
Shares of WageWorks closed at $59.02 yesterday.
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