UPDATE: Citigroup Reiterates Neutral Rating, Raises PT for DigitalGlobe
In a company update released earlier today, Citigroup Inc. reiterated its Neutral rating for DigitalGlobe, Inc. (NYSE: DGI) and slightly raised its price target from $14.75 to $15.00.
Citigroup went on to say “1Q12 failed to fully address our looming concerns over DGI's largest program, EnhancedView (EV). The company disclosed that it had restructured the program, boosting revenue recognition on the base SLA, but sacrificing value-added services (by our math this represents a 20% reduction to the original program value of $3.55b over 10Y). Details were limited due to the classified nature of the program, but it appears to be a classic DC budget game in which future money going unspent is counted as savings today. We are warming to the story as this tactic can work (i.e. the contract modification could better insulate EV from the budget axe). But, in our mind the axe still looms so we'd look to get more constructive after some of the budget battles pass.”
DigitalGlobe, Inc. closed at $13.42 yesterday.
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