On Thursday, Wolfe Research initiated coverage on shares of Broadridge Financial (NYSE:BR) with a Peerperform rating. The firm highlighted the company's solid recurring revenue and positioning within the capital markets and financial services sectors.
According to InvestingPro data, Broadridge has demonstrated consistent financial strength with a GOOD overall health score and maintains an impressive 18-year track record of consecutive dividend increases. Broadridge's exposure to these areas is seen as a positive due to the ongoing democratization of investing, which is expected to support growth in its Investor Communication Solutions (ICS) division.
The Wealth segment of Broadridge is also viewed favorably. The demand for technological modernization among advisors and wealth management (WM) firms is considered robust, bolstered by the transfer of wealth that is channeling more funds into WM firms.
Wolfe Research commends Broadridge's stable capital return program and believes the company's medium-term targets, which include 5-8% organic recurring revenue growth and 8-12% adjusted EPS growth, are within reach.
The company's current revenue growth of 4.7% and strong return on equity of 32% support these growth projections. For deeper insights into Broadridge's growth metrics and financial health indicators, InvestingPro subscribers can access the comprehensive Pro Research Report, available for over 1,400 US stocks.
The current valuation of Broadridge shares is at 26.5 times next twelve months (NTM) earnings per share (EPS), which carries a 4.4 times premium over the S&P. This valuation is regarded as being roughly equivalent to the company's historical median levels. Wolfe Research notes a more optimistic outlook for companies linked to capital markets and investment end markets for the year 2025 compared to credit bureaus.
However, they also believe that the valuation is relatively full and suggest that there may be greater potential for multiple expansion with other companies in their coverage universe.
In other recent news, Broadridge Financial Solutions (NYSE:BR) reported a strong fiscal first quarter 2025, noting a 4% rise in recurring revenue and a record $57 million in closed sales, a 21% increase year-over-year. The company also revealed an adjusted earnings per share (EPS) of $1 and upgraded its recurring revenue guidance for fiscal 2025 to 6%-8%, up from the previously forecasted 5%-7%.
UBS initiated coverage on Broadridge Financial stock with a Neutral rating and a price target set at $250, projecting steady recurring revenue growth in the mid- to high-single digits over the medium term. However, UBS remains cautious due to what it considers a "fairly full" valuation.
Broadridge Financial Solutions also announced that all management's proposals were approved by the shareholders at its 2024 Annual Meeting. These included the election of 10 directors, the Say on Pay vote, and the ratification of Deloitte & Touche LLP as the company's independent auditors.
DA Davidson increased Broadridge's price target from $205.00 to $210.00, maintaining a neutral rating on the stock, following Broadridge's fiscal first-quarter earnings.
Broadridge continues to explore merger and acquisition opportunities while maintaining a focus on organic growth, with a robust sales pipeline and a backlog of $450 million. These are the recent developments in the company's activities.
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