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On Thursday, Stifel analysts held steady on their positive outlook for Amdocs Ltd. (NASDAQ:DOX), reiterating a Buy rating and a $100.00 price target. With the stock currently trading at $93.83, near its 52-week high, InvestingPro analysis suggests the company remains undervalued. The endorsement comes after an evaluation of the company’s recent performance, which was deemed to align with expectations or to slightly surpass them once adjustments were made for a lower tax rate.
The analysts observed that Amdocs management presented a consistent tone, noting no significant shifts in customer purchasing or expenditure patterns compared to the previous quarter. This stability is reflected in the company’s strong financial health metrics, with a return on equity of 14% and return on invested capital of 15%. They highlighted that the company’s backlog, which indicates future revenues, is on an upward trajectory and that Amdocs’s free cash flow (FCF) was considered solid, with the company maintaining moderate debt levels and a healthy current ratio of 1.16.
Despite minor adjustments to their model, primarily regarding tax rate and some working capital assumptions, Stifel’s analysts have decided to keep their earnings per share (EPS) estimates for fiscal years 2025 and 2026 unchanged. This decision reflects a steady confidence in the company’s financial prospects.
The analysts’ commentary underscores the stability of Amdocs’s operations and financials. "Management’s tone was very even-keeled, in our view, and there doesn’t seem to be a change in customer buying or spending patterns from last quarter. Backlog continues to grow, FCF was solid, in our view, and annual guidance was maintained," they stated.
In conclusion, Stifel’s analysis suggests that Amdocs is maintaining its course, with no alterations to the company’s annual guidance. The firm’s analysts see no reason to modify their positive stance on Amdocs stock, encouraging investors with a maintained Buy rating and a steady price target. InvestingPro reveals additional compelling insights about Amdocs, including 10 more ProTips and a comprehensive Pro Research Report, helping investors make more informed decisions about this consistently performing company.
In other recent news, Amdocs Limited reported second-quarter earnings that exceeded analyst expectations, with adjusted earnings per share reaching $1.78 compared to the consensus estimate of $1.72. However, the company’s revenue came in at $1.13 billion, slightly below the anticipated $1.15 billion, although it was within the company’s guidance range. The revenue declined 9.4% year-over-year but showed a 4% increase on a pro forma constant currency basis after adjustments. Looking ahead to fiscal 2025, Amdocs expects a reported revenue decline between 10.9% and 9.1%, but anticipates growth of 1.7% to 3.7% on a pro forma constant currency basis. Despite the challenging macroeconomic environment, Amdocs maintained its target for double-digit total shareholder returns in fiscal 2025, supported by improved profitability and strong cash flow. The company also announced a new $1 billion share repurchase program. For the upcoming third quarter, Amdocs forecasts revenue between $1.11 billion and $1.15 billion, with adjusted EPS projected to be between $1.68 and $1.74.
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