DA Davidson maintains Buy on NCR Atleos, $60 price target

On Tuesday, NCR (NYSE:VYX) Atleos Corp. (NYSE: NATL), currently trading at $26.18, received a reaffirmed Buy rating and a $60.00 price target from DA Davidson. The firm’s analyst, Matt Summerville, provided insights following the company’s release of its fourth-quarter 2024 financial results. With annual revenue of $4.3 billion and EBITDA of $736 million, NCR Atleos reported revenue, adjusted operating profit (OP), adjusted earnings per share (EPS), and free cash flow (FCF) that all exceeded DA Davidson’s expectations. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations.

The company saw high single-digit (HSD) sales growth within its Secure Services Business (SSB), which was two percentage points above what DA Davidson had projected. This growth was attributed to strong hardware demand and expansion within its as-a-service offerings. While Network sales did not meet the firm’s model, despite achieving record EBITDA profitability, the company maintains a gross profit margin of 23.9%. InvestingPro subscribers have access to 10 additional key insights about NATL’s performance and prospects.

NCR Atleos also provided initial guidance for the year 2025. The company expects core sales, excluding Voyix, to increase by 3% to 6%, which aligns with DA Davidson’s model that anticipates a 4% growth. Adjusted EBITDA is projected to grow by 6% to 9%, including a one percentage point impact from foreign exchange headwinds. DA Davidson’s model forecasts an 8% increase without considering foreign exchange impacts. Free cash flow for 2025 is anticipated to be consistent with the firm’s expectations.

Additionally, the company has successfully reduced its balance sheet leverage quarter over quarter from 3.5x to 3.2x. This improvement in financial health may pave the way for NCR Atleos to consider a stock buyback program as the year progresses.

Summerville’s analysis concluded with a reiteration of the Buy rating and a $60 price target, reflecting confidence in NCR Atleos’s financial performance and growth prospects.

In other recent news, NCR Atleos Corp reported a notable earnings beat for the fourth quarter of 2024, achieving an earnings per share (EPS) of $1.11, which surpassed the forecasted $0.80. Despite this, the company reported a revenue of $1.11 billion, falling short of the expected $1.16 billion. The company also highlighted strong growth in its ATM as a Service business, which increased by 27% year-over-year. For the full year, NCR Atleos recorded a revenue of $4.3 billion, marking a 3% increase from the previous year, and an adjusted EBITDA of $781 million, up 7%. Looking ahead to 2025, the company projects an EPS range of $3.90 to $4.10 and anticipates core revenue growth of 3-6% in constant currency. Stifel analysts have maintained a Hold rating on NCR Atleos with a price target of $34, acknowledging that the company’s performance metrics generally exceeded consensus expectations. However, they noted the need for further clarity on various aspects of the company’s business, including revenue trends and margin developments. These recent developments indicate ongoing strategic efforts and financial performance adjustments by NCR Atleos.

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