Broadridge Financial Solutions Faces Market Challenges Despite Positive Earnings Report
Broadridge Financial Solutions, Inc. (BR), located in Lake Success, New York, specializes in investor communications and technology-driven solutions for the financial services sector. The company has a market capitalization of $26.9 billion and operates through segments such as Investor Communication Solutions, Global Technology and Operations, among others.
Underperformance Compared to Broader Markets
In the past year, Broadridge Financial has struggled to keep pace with the broader market. While BR stock has risen by 11.9% in 2024 and 23.3% in the last year, it still lags behind the S&P 500 Index, which has surged by 25.2% in 2024 and 31% year-over-year.
Comparison with Technology Sector Performance
When narrowing the scope, Broadridge has also underperformed relative to the Technology Select Sector SPDR Fund (XLK), which saw gains of 21.4% year-to-date and 26.4% in the past year.
Earnings Report Boosts Stock
Broadridge’s stock price jumped 4.1% following its Q1 earnings report released on November 5. The company disclosed a notable 3.3% growth year-over-year in reported revenue, reaching $900.3 million, with a nearly 4% increase on a constant currency basis in recurring revenues. The firm also raised its full-year growth estimate for constant currency recurring revenues from 5%-7% to 6%-8%. This adjustment reflects strong organic growth and benefits from its acquisition of Kyndryl’s Securities Industry Services business, enhancing its offerings in Global Technology and Operations.
Broadridge achieved an adjusted EPS of $1, meeting analysts’ expectations, and reaffirmed its annual adjusted EPS guidance of 8%-12%, further boosting investor trust. For the current fiscal year, ending June 2025, analysts predict a 10.4% growth in adjusted EPS, estimating it to reach $8.53. Impressively, Broadridge has a history of exceeding or meeting analysts’ earnings estimates over the past four quarters.
Consensus Rating and Analyst Outlook
Overall, BR stock holds a consensus rating of “Moderate Buy.” Among eight analysts, one recommends a “Strong Buy,” two suggest a “Moderate Buy,” while five advise a “Hold” rating.
Price Target Updates
On November 6, RBC Capital analyst Daniel Perlin maintained a “Buy” rating with a price target set at $246, implying a potential upside of 6.8% from current trading levels. Currently, BR is trading slightly above its average price target of $229.14, while the Street-high target of $250 suggests an 8.6% premium to its present price.
On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) any positions in the securities mentioned. All information in this article is for informational purposes only. For additional details, please refer to the Barchart Disclosure Policy here.
The views expressed in this article are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.
