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Nomura Out Bullish On Exela Technologies Ahead Of Q2 Report

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Nomura Out Bullish On Exela Technologies Ahead Of Q2 Report
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Exela Technologies (NASDAQ: XELA) is set to release second-quarter results Aug. 9, and Nomura is taking a bullish stance ahead of the print. 

The Analyst

Nomura's Dan Dolev initiated coverage of Exela Technologies Inc (NASDAQ: XELA) with a Buy rating and $10 price target. (See the analyst's track record here.) 

Dolev named six reasons to own Exela Technologies:

  • The company has a large and growing total addressable market, with a global business processing outsourcing and business-processing-as-a-service market of $270 billion; he expects it to grow at more than a 5-percent CAGR by 2022. 
  • Exela's exposure to legal and health care outsourcing could generate above-industry growth rates, the analyst said. 
  • Dolev sees the company as well-positioned to win because it serves nine of the top 10 U.S. banks, 14 of the top 20 U.S. insurance companies and the top 5 health care payers. It also has low customer concentration, little reliance on H1B Visas and an abundance of proprietary technology, he said. 
  • Exela has improving fundamentals, Dolev said. Revenue per employee has increased from $17,000 over a decade ago to $69,000 today. The analyst forecast a mid-single-digit reduction in the employee base and a 95-percent renewal rate.
  • Potential savings and synergies could drive 400-500 basis points of margin growth by 2020, Dolev said. The company has identified more than $80 million in synergies, he said. 
  • The stock has an attractive valuation and trades at a 50-percent discount to peers, according to Nomura. 

The Price Action

The stock gained around 6 percent on Monday and it is currently trading around $5. Nomura's price target implies that there is a chance to double your money in the stock.

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Latest Ratings for XELA

DateFirmActionFromTo
Oct 2018Morgan StanleyInitiates Coverage OnOverweight
Jul 2018NomuraInitiates Coverage OnBuy
Apr 2018RBC CapitalInitiates Coverage OnOutperform

View More Analyst Ratings for XELA
View the Latest Analyst Ratings

Posted-In: Dan Dolev NomuraAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

 

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