UBS assesses the company’s interest-rate leverage appears to have run its course. Earnings growth is now increasingly dependent on cost reductions and growth in mortgage services.
While the broker expects mortgage services to rebound strongly in 2019, the growth could be short lived.short-livedor this, and lower yields, UBS lowers FY21 estimates for earnings per share by -6%.
The broker considers the slippage in US revenue and earnings a temporary setback, although expects the UK will face a step down from FY21. Neutral rating maintained. Target is reduced to $18.15 from $18.80.
Sector: Software & Services.
Target price is $18.15.Current Price is $16.88. Difference: $1.27 – (brackets indicate current price is over target). If CPU meets the UBS target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).