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J.P. Morgan Reiterates Overweight Rating on CA Technologies (CA)

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J.P. Morgan is out with a research report this morning where it reiterates its Overweight rating on CA Technologies (NASDAQ: CA); it also lowered its price target to $27.00 from $29.00

The JPM analysts said, “CA reported non-GAAP EPS of $0.45 on revenue of $1.09B, versus consensus of $0.42 and $1.06B and our $0.41 and $1.07B, respectively. Cash flow from operations declined by 55% (or $145M) from a year ago to $117M, though the absolute decline was less excluding upfront payments.”

They noted, “This is now a “Trust Me” story, with difficult yoy comps for bookings in the 1H. Management indicated that CA’s renewal portfolio has much better comps in the 2H, which is when the majority of the bookings and cash flow should be realized.”

The JPM analysts said, “CA’s results are not indicative of a company with traction, but even if recent attempts to infuse growth through acquisitions fail, we do not believe the cash generation of the company is in jeopardy. While investors may be concerned about capital allocation, we believe management will adjust its strategy if it appears to be the appropriate measure.”

The JP Morgan analysts closed by saying, “We continue to rate CA Overweight, but are reducing our Dec-10 price target slightly to $27 from $29 based on our DCF, which accounts for our estimate revisions. While the value of the recurring cash flow from the maintenance-like revenue alone is likely worth more than this, we believe investors will continue to discount this for now due to concerns regarding capital allocation.”

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Posted-In: JP MorganAnalyst Color Price Target Analyst Ratings

 

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