UPDATE: Credit Suisse Initiates Cubic at Neutral On Solid Growth Potential, Limited Top-Line Upside

In a report published Monday, Credit Suisse analyst Julian Mitchell initiated coverage on Cubic CUB with a Neutral rating and a price target of $53.

In the report, Credit Suisse cited, “We see a solid growth story/existing backlog in Transportation and believe that CUB’s efforts to expand its addressable market (parking, toll, and customer information) should yield incremental gains over time. The traditional fare collection business should expand, given favorable trends in U.S. fare revenue and urbanization/mass transit. Scope for smart card penetration in existing U.S. transit systems is another growth lever. However, the company has 61% revenue exposure to U.S.-focused defense markets; given budgetary pressures and flat expectations for U.S. DoD spend, we see little top-line upside in these businesses.

Cubic closed Friday at $49.21.