NCR Atleos Corp. (NATL) PT Raised to $48 at DA Davidson

DA Davidson analyst Matt Summerville raised the price target on NCR Atleos Corp. (NYSE: NATL) to $48.00 (from $30.00) while maintaining a Buy rating.

The analyst comments "Following NATL’s 1Q24 results and our subsequent model update, we have made surgical adjustments to our revenue (slightly lower) outlook and adjusted EBITDA estimates for 2024 (unch. for EBITDA) and 2025 (slightly higher for EBITDA). Segment-level KPIs continue to demonstrate solid underlying business fundamentals across its two main segments, Self-Service Banking (SSB) and Network, setting the stage for an improved top- and bottom-line performance in 2024 despite known and previously communicated headwinds associated with its ATMaaS transition aimed at driving a greater mix of recurring revenue and expanding wallet share with existing customers. NATL’s ARPU focus within Network, along with favorable transactional trends should drive MSD+ organic growth in this segment in 2024, alongside improved segment level profitability, noting the company’s Network footprint optimization effort has clearly contributed to ARPU expansion. We reaffirm our favorable disposition on the name and are increasingly convinced that a sound execution story is emerging within this NCR Corp. spin-co., after many, many years of mixed pre-separation performance and lack of overall value creation (arguably dating back into the mid-2000’s, following Mark Hurd’s departure to HP; we’ve followed NATL/VYX since 2001). Recognizing these factors and our updated view on a material re-rate higher from here, we lift our PT from $30 to $48, which represents 7.0x EV/EBITDA based on our 2025 adjusted EBITDA estimate."

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