Computershare Limited.

( ASX:CPU ) - ASX200 Software & Services


Brokers Not All Keen On Computershare

Computershare ((CPU)) has confirmed the suspicions of several brokers that original guidance provided at the FY17 result was conservative. Four months into the first half, the company now expects management earnings will be up 10% in constant currency terms. This compares with prior guidance of 7.5%. The lift in performance is attributed to stronger contributions from corporate actions and mortgage services.

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Computershare Reinstates Growth Profile

Having announced the proposed acquisition of the shareholder registry operations of BNY Mellon in April of this year it has been a long wait to finally receive regulatory approval for Computershare (CPU). Yesterday the US$550 million deal was approved and should now close early in January of next year.

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Analyst Views

CPU – Morgan Stanley rates the stock as Underweight

Computershare is a highly cyclical stock and Morgan Stanley believes the earnings risks for FY20 are building. Three warning signs the broker highlights are the slump in US/UK equity markets, which are down -10-12% from their peaks, predictions of a rolling bear market and the fact that competitors are flagging softer UK plan activity because of elevated uncertainty around Brexit.

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CPU – UBS rates the stock as Neutral

The company has announced the acquisition of Equatex, a European employee share plan administration business headquartered in Zurich. This represents a key growth segment for the company and UBS suggests it should add significant outer year accretion based on synergies across the combined platform.

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