Oppenheimer analyst Ian Zaffino maintained a Buy rating on CDK Global (NASDAQ: CDK) today and set a price target of $80. The company’s shares opened today at $62.61, close to its 52-week low of $60.28.
Zaffino commented:
“Helped by its transformation initiative, scale from increased subscription revenues, and lower incentive compensation, CDK delivered solid F4Q18 results. Adj. EBITDA of $209.5M was in line with our/Street’s $210M/$211M ests while adj. EPS of $0.87 compared to our/Street’s $0.84. 4Q18/FY18 adj. EBITDA margins of 36.8%/35.9% improved 450bps/380bps YoY, respectively. Mgmt provided FY2019 guidance of adj. EPS of $3.85-3.95 and adj. EBITDA margin of 39-40% (35.9% in F2018). Revenues are expected to be -1-1% YoY, driven by 2-3% growth in core auto software, offset by a 15-20% decline in the low-margin advertising business (related to a key OEM customer). Management also provided LT growth outlook for F2020 and beyond which calls for rev. growth of 4-5%, EBITDA growth of 8-12%, and EPS growth of 15-20%. We reduce our F2019E adj. EPS to $3.93 from $4.07. Maintain Outperform.”
According to TipRanks.com, Zaffino is a 4-star analyst with an average return of 3.4% and a 55.1% success rate. Zaffino covers the Services sector, focusing on stocks such as Servicemaster Global Holdings, Wyndham Destinations Inc, and Peak Resorts.
Currently, the analyst consensus on CDK Global is a Moderate Buy with an average price target of $80, which is a 27.8% upside from current levels. In a report released yesterday, Barrington also maintained a Buy rating on the stock with a $80 price target.
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Based on CDK Global’s latest earnings release for the quarter ending March 31, the company reported a quarterly net profit of $96.1 million. In comparison, last year the company had a net profit of $58.7 million.
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CDK Global, Inc. provides integrated information technology and digital marketing solutions to the automotive retail industry. It operates through following segments: Retail Solutions North America, Advertising North America and CDK International.
