Barclays on U.S. IT Consulting & Computer Services: 2Q11 Earnings Preview: LPS, CLGX
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Up: 8 | Down: 5 | New: 26
Rating Summary:
1 Buy, 3 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on U.S. IT Consulting & Computer Services: 2Q11 Earnings Preview: LPS, CLGX
Barclays analyst says, "In 2Q11, market expectations for a resolution of regulatory delays impacting the mortgage processors' default services businesses perceived at 2010 year-end to be a relatively near-term redeeming factor for earnings power in a still-challenging origination market - continued to reset downward..."
"Lender Processing Services (NYSE: LPS) (earnings release after market today, 8/25): Recall, the company pre-announced 2Q EPS of $0.54-0.56 and will now update full-year guidance. After incorporating new information on second-quarter trends and expectations for ongoing industry challenges in 2H11, we expect a nearly 18% decline in revenue and EPS of $2.60 in FY 2011. While the EPS outlook will be watched closely, we believe investors will look most for (1) Reassurance that revenue delays are in fact delays and not lost opportunities; (2) Further clarity on the impact of recent and upcoming industry regulatory measures; (3) Confidence in the company's ability to execute going forward in light of the recent management change; and (4) Long-term viability of the business model."
"CoreLogic (Nasdaq: CLGX) (8/4 earnings release after market): Relative to LPS, CLGX's business mix somewhat limits regulatory exposure, although we believe investors are looking to get more comfortable around fundamental trends (recall, standing guidance remains the same as it was at 2010 year end). Given the challenging state of the housing market, we are modeling 2011 EBITDA toward the low end of guidance (although with potential upside from strong demand for risk analytics products and share gains/customer wins across segments). We note that guidance included only $70 million in share repurchases when given during the 4Q call, versus $130 million already completed through April; we believe these and additional buybacks leave room to meet the EPS guide even at the lower end of EBITDA guidance. We also look for an update on progress of the CFO appointment expected this quarter."
Barclays analyst says, "In 2Q11, market expectations for a resolution of regulatory delays impacting the mortgage processors' default services businesses perceived at 2010 year-end to be a relatively near-term redeeming factor for earnings power in a still-challenging origination market - continued to reset downward..."
"Lender Processing Services (NYSE: LPS) (earnings release after market today, 8/25): Recall, the company pre-announced 2Q EPS of $0.54-0.56 and will now update full-year guidance. After incorporating new information on second-quarter trends and expectations for ongoing industry challenges in 2H11, we expect a nearly 18% decline in revenue and EPS of $2.60 in FY 2011. While the EPS outlook will be watched closely, we believe investors will look most for (1) Reassurance that revenue delays are in fact delays and not lost opportunities; (2) Further clarity on the impact of recent and upcoming industry regulatory measures; (3) Confidence in the company's ability to execute going forward in light of the recent management change; and (4) Long-term viability of the business model."
"CoreLogic (Nasdaq: CLGX) (8/4 earnings release after market): Relative to LPS, CLGX's business mix somewhat limits regulatory exposure, although we believe investors are looking to get more comfortable around fundamental trends (recall, standing guidance remains the same as it was at 2010 year end). Given the challenging state of the housing market, we are modeling 2011 EBITDA toward the low end of guidance (although with potential upside from strong demand for risk analytics products and share gains/customer wins across segments). We note that guidance included only $70 million in share repurchases when given during the 4Q call, versus $130 million already completed through April; we believe these and additional buybacks leave room to meet the EPS guide even at the lower end of EBITDA guidance. We also look for an update on progress of the CFO appointment expected this quarter."
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