TD Newcrest Upgrades EXFO Inc. (EXFO) to Buy; More Attractive Valuation
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Price: $6.25 --0%
Rating Summary:
0 Buy, 5 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 9 | Down: 7 | New: 5
Rating Summary:
0 Buy, 5 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 9 | Down: 7 | New: 5
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TD Newcrest upgraded EXFO Inc. (NASDAQ: EXFO) from Hold to Buy. PT lowered to $11.50.
TD analyst says, "Given the drop in the shares since the Q2/11 results (-24%), we think the valuation has swung to attractive levels at 12x EV/LTM EBITDA (vs. key comp JDSU at 18x) and a 6.2% LTM FCF yield. A key point of our investment thesis is that we see wireless revenue (now about 20% of sales) growing faster than expected – given the need for a rapid turn-up in services – driving gross margin leverage. EXFO is arguably an earlier cycle play on wireless infrastructure than SVC, BWC or others. In our view, the FY09- FY12 target revenue CAGR of 25% implies top-tier organic growth, matched with the visibility of quarterly guidance. We have reduced our FY12 EPS estimate to $0.48 (from $0.52; Street $0.49) to assume higher expense ratios."
For more ratings news on EXFO Inc. click here and for the rating history of EXFO Inc. click here.
Shares of EXFO Inc. closed at $8.21 yesterday.
TD analyst says, "Given the drop in the shares since the Q2/11 results (-24%), we think the valuation has swung to attractive levels at 12x EV/LTM EBITDA (vs. key comp JDSU at 18x) and a 6.2% LTM FCF yield. A key point of our investment thesis is that we see wireless revenue (now about 20% of sales) growing faster than expected – given the need for a rapid turn-up in services – driving gross margin leverage. EXFO is arguably an earlier cycle play on wireless infrastructure than SVC, BWC or others. In our view, the FY09- FY12 target revenue CAGR of 25% implies top-tier organic growth, matched with the visibility of quarterly guidance. We have reduced our FY12 EPS estimate to $0.48 (from $0.52; Street $0.49) to assume higher expense ratios."
For more ratings news on EXFO Inc. click here and for the rating history of EXFO Inc. click here.
Shares of EXFO Inc. closed at $8.21 yesterday.
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