Needham & Company Reiterates Buy on Broadsoft (BSFT) Following Announced Convert Deal

Needham & Company reiterated a Buy rating and $40.00 price target on Broadsoft (NASDAQ: BSFT) following the announcement and subsequent pricing of BSFT's $175MM convert deal. The deal meaningfully increases BSFT's cash (but not net cash) on its balance sheet and eliminates any intermediate concerns regarding the company's 2018 converts.

Analyst Richard Valera commented, "Since the announcement and subsequent pricing of BSFT's $175MM (~$200MM w/shoe) convert deal, shares are down ~7%, substantially more than the ~2% NG EPS dilution we estimate from the deal. We suspect some of this weakness is due to investor concerns around a possible change in the company's historical M&A strategy, which has been characterized by a steady stream of small, strategic, tuck-in acquisitions over the last few years. Based on discussions with BSFT and our own analysis of its cash flow/balance sheet, we do not believe this to be the case. We continue to see BSFT as having robust fundamentals driven by its transformational wins and evidenced by 23% y/y billings growth in C2014 and 27% ytd billings growth. We reiterate our Buy rating and $40 PT."

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

Shares of Broadsoft closed at $30.74 yesterday.

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