UPDATE: Susquehanna Downgrades Unisys

In a report published Friday, Susquehanna analyst James Friedman downgraded

to Neutral from Positive, with a $30.00 price target. According to the report, although UIS management is doing an excellent job energizing the company with a clear product roadmap, a lower cost structure and an improved delivery team, analysts believe major catalysts are now priced in with shares up more than 70 percent. “Our DCF is super-sensitive to changes in revenue growth and margin assumptions,” the report noted. “For example, should the revenue CAGR decrease/increase just 100 bps, the value moves $2 per share (Figure 2); at the same time a 100 bps delta in margins yields $3 per share. On a P/E basis, our price target of $30 is based on ~6.5x NTM adjusted EPS of $4.51. Multiple expansion will likely require some top-line growth.” A risk to UIS is a $35 based on ~8x forward adjusted EPS. As interest rates increase, this could be achieved. UIS closed Thursday at $32.23 with shares trading down at 4.48 percent.