Credit Suisse All Aboard The Advisory Board

Initiating coverage on Monday, Credit Suisse analyst Robert Willoughby gave The Advisory Board Co ABCO an Outperform rating with a $40 price target. He said shares of Advisory Board crashed in Q4 2015 due to revenue growth concerns, but believes shares can recover most of what they lost this year.

One of the reasons Willoughby remains so optimistic is that The Advisory Board can grow through cross-selling their new and existing solutions. Among other levers to pull, the company can attract new members, build and acquire new software capabilities, realize greater economies of scale through a fixed cost base. If the company is able to execute this, Willoughby sees a long-term annual adjusted EPS growth of 13 percent.

Given this potential, Willoughby believes the company can achieve a EV/EBITDA multiple of 10.6X, which trades closely to its peer group. Selling Season for The Advisory Board's education segment could provide a catalyst for the stock.