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On Wednesday, Jefferies analyst Simon Fitzgerald downgraded Computershare Limited (CPU:AU) (OTC: CMSQY) stock from Buy to Hold, while increasing the price target to AUD39.50 from AUD34.00. The stock currently trades at $22.86, near its 52-week high of $23.05, after delivering an impressive 43% return over the past year. Computershare’s first half of 2025 management income (MI) of $394 million accounted for 66% of its earnings before taxes, interest, depreciation, and amortization (EBTIDA), showing resilience with only a $2 million decline despite interest rate cuts in key markets. According to InvestingPro, the company maintains a GREAT financial health score of 3.31.
Fitzgerald highlighted that the strength of Computershare’s performance was not only due to the robustness of management income but also because of earnings before interest and tax (EBIT) excluding MI, which rose across the three core businesses. Further, the company’s earnings per share (EPS) guidance was revised upwards to 135 cents per share from the previous 126 cents per share. InvestingPro data shows the company’s strong fundamentals, with a healthy P/E ratio of 24.3 and projected EPS of $1.28 for FY2025.
The analyst pointed out that the increase in the price target to AUD39.50 now sits 4% below the current share price, which led to the decision to downgrade the stock to Hold. The positive aspects of the report, such as the return of higher-margin event-driven activity, provide some natural offsets in a falling rate environment, underscoring the company’s ability to manage through changing economic conditions. This resilience is reflected in the company’s strong financial metrics, including a 5.84% revenue growth and robust gross profit margin of 29.94% in the last twelve months.
The upgrade in EPS guidance reflects Computershare’s strong performance and outlook, despite the potential challenges posed by the global economic environment, including interest rate fluctuations. Computershare’s ability to maintain management income and grow core business earnings demonstrates the company’s operational resilience and strategic adaptability.
Jefferies’ revised price target and stock rating represent a nuanced view of Computershare’s current valuation and future prospects, balancing the recent positive developments against the stock’s existing price levels.
In other recent news, Computershare Limited has been in the spotlight following the release of its first-half results for the fiscal year 2025. The company reported an upgrade in its EBIT ex MI (earnings before interest and tax excluding margin income) guidance and an increased forecast for Margin Income. This positive financial performance led to a revised full-year 2025 management EPS guidance from an estimated 7.5% increase to a forecast of around 15% growth. In addition, the company committed to completing their share buyback program by the end of the fiscal year 2025.
Several analyst firms have weighed in on these developments. Macquarie maintained a Neutral rating on Computershare with a price target of AUD34.00, while Citi reaffirmed its Neutral stance, maintaining an AUD35.00 price target. Goldman Sachs downgraded the stock from Buy to Neutral, raising the price target to AUD35.50 from AUD31.00, citing changes in currency valuation and minor adjustments to earnings estimates. Similarly, Macquarie revised its stance on Computershare, downgrading the stock rating from Outperform to Neutral despite increasing the price target to AUD34.00 from AUD28.00.
These recent developments have drawn investor attention to Computershare, with the company’s financial results and analyst ratings providing insights into its current performance and future prospects.
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