JMP Securities Upgrades WageWorks (WAGE) to Market Outperform
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JMP Securities analyst David Scharf upgraded WageWorks (NYSE: WAGE) from Market Perform to Market Outperform with a price target of $37.00.
The analyst coments "With our greater comfort level that WAGE has retained its key channel partners in the wake of last year’s loss, we still see a relatively stable and moderately defensive recurring revenue model with significant cash generation and operating leverage. And while the secular growth outlook for consumer-directed benefits other than HSAs is modest, Street estimates have already discounted this, and M&A opportunities remain. Based on several recent developments, the intensifying sell-off in the shares recently, and our discussions with management, we see a risk/reward trade-off that is now more biased to the upside. In particular, we note: 1) a compelling valuation based off of very slight growth assumptions; 2) our belief that inherent in the appointment of new auditors last month is a very strong commitment and plan to wrap up the audits and become an up-to-date SEC filer prior to the March 16 NYSE deadline; 3) the generation of over $160M of incremental cash in the 12 months since the 3Q17 10-Q was filed; and 4) the opportunity to engage in either accretive M&A or buybacks after the company satisfies its filing obligations."
Shares of WageWorks closed at $29.48 yesterday.
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