UPDATE: Compass Point Reiterates NCR Corporation to Buy Following Retalix Acquisition
Compass Point maintained its Buy rating and $30 price target on NCR Corporation (NYSE: NCR) following an accretive, though expensive, expansion of retail footprint.
Compass Point noted, "Our estimates are unchanged this year and revised to $2.60 next year (+3 cents from $2.57 previously). The company is taking large steps to drive growth - that are not cheap. The acquisition of Retalix was priced at 17x forward EBITDA. The good news is that the price tag is lower than the Radiant deal completed at 18x forward EBITDA. In combination, both deals have resulted in the addition of significant debt to the balance sheet. With rates where they are, the use of leverage is manageable. And if the deals produce healthy cash flow, then there should be future capacity to de-leverage. Nonetheless, we admit that the strategy is aggressive. In summary, the company continues to move towards the 2015 free cash flow target of $400-$500 million."
NCR Corporation closed at $23.75 on Wednesday.
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