Brean Capital Cuts Price Target on Pitney-Bowes (PBI) Following 1Q Miss

Brean Capital maintained a Buy rating on Pitney Bowes (NYSE: PBI), and cut the price target to $24.00 (from $25.00), following the company's 1Q earnings report. PBI reported revenue and EPS of $845M and $0.34, missing the Street's estimates of $870M and $0.40. The Company expects an incremental marketing expense in the Jun Q of ~$0.03. Additionally, Jun Q ERP is expected to be higher than Mar Q EPS impact of ~$0.01.

Analyst Ananda Baruah commented, "We believe there is good value here as PBI had a very solid operational Q ex-software (Figure 1). That said, a very real downside of PBI not providing quarterly guidance is what happened this Q as Street was at $0.40, while we believe PBI expected $0.37 - $0.39 excluding the software softness. Paradoxically, we believe the biggest hurdle to the stock could now be PBI maintaining its '16 EPS guidance of $1.80 - $2.00 (Street at $1.83 into the call). The year is very back-end loaded, and we believe PBI's true target range is likely now $1.80 - $1.85 with the 'base' biz at ~$1.65, with ERP potential ~$0.10, BorderFree synergies ~$0.05, and Software fix potential ~ $0.05. If accurate, that doesn't leave PBI with much wiggle room in the context of the current guide. We'd love to see them reduce the range, providing comfort to investors in its achievability, and thus helping the P/E. Our $24 TP (from $25) is 12x (PBI median) our '17E EPS of $2.00."

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

Shares of Pitney Bowes closed at $18.93 yesterday.

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