WageWorks (WAGE): Raising Estimates Based On Accelerating Organic Growth - Needham

November 10, 2016 6:43 AM EST
Get Alerts WAGE Hot Sheet
Price: $71.70 -0.14%

Rating Summary:
    6 Buy, 0 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 22 | Down: 17 | New: 13
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Needham & Company analyst, Mayank Tandon, reiterated his Buy rating on shares of WageWorks (NYSE: WAGE) and raised the price target to $74 after the company beat consensus estimates on both revenue and EPS, highlighted by accelerated 20% Y/Y organic growth in the core healthcare, commuter, and COBRA businesses.

WAGE raised revenue guidance for the year, reflecting contributions from the ADP acquisition, but reduced EPS and EBITDA to account for increased investment in relation to the Office of Personnel Management (OPM) open enrollment and expenses relating to the acquisition. The analyst believes that organic growth trends remain encouraging, and that favorable trends continue to position WAGE well for growth upside in FY17.

Management introduced guidance of $102.4-105.4MM in revenue, $0.33-0.36 in EPS, and $27.9-29.9MM in adjusted EBITDA for 4Q. While revenue is above consensus of $98.5MM due to the expected contribution of $6-8MM from the ADP acquisition, EPS and EBITDA guidance are both below consensus due to onetime investments for the first OPM open enrollment and expenses from the ADP acquisition.

The price target increases to $74 from $65, based on 6x EV/FY17 revenue and 21x EV/FY17 EBITDA.

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

Shares of WageWorks closed at $67.20 yesterday.

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