CoreLogic Upgraded At Stephens; Transformation Story Being 'Clouded'

In a report published Tuesday, Stephens analyst John Campbell upgraded the rating on Corelogic Inc CLGX from Equal-Weight to Overweight, while raising the price target from $43 to $47. The company is well positioned to beat or raise its guidance for Q2. "[W]e believe CLGX, due to the fluctuating end markets, has yet to get the full credit it deserves for the degree of heavy lifting it has done over the last several years. We look for a steadier mortgage market exiting 2Q to help CLGX grind its way to eventual mid-30 percent adj. EBITDA margin," Campbell stated. The analyst expects the company to post another strong quarter in Q2, with incremental margins of about 52 percent. In addition, the TPS business is expected to benefit from the favorable refi trends, leading to high single-digit D&A organic growth. The continuing weakness in the multifamily segment is expected to be more than offset by gains in the property info and insurance segments. "Simply put, we are expecting CLGX to beat 2Q expectations across the board, and we are expecting a 2015 full-year guidance raise. We do believe there is a general investor expectation for a guidance raise given original guidance implies a ~$1 tril. origination market vs. current forecasted ~$1.2 tril, but we believe the Company has left itself plenty of room in the back half of the year," the Stephens report said. The revenue estimates for 2015 and 2016 have been raised slightly from $1,501 million to $1,503 million and from $1,568 million to $1,569 million, respectively. The adjusted EBITDA estimates for 2015 and 2016 have also been raised.