PBI - Pitney Bowes: FY2024 Guide And Lack Of Details On GEC Changes Disappoints Investors
2024-02-06 12:19:24 ET
Summary
- Weak FY2024 guidance and lack of detail on changes in the GEC segment left much to be desired by all investors in the Q4 earnings call.
- I remain bullish on the stock with a $10 price target based on $150-$200mm of normalized FCF, a 10x multiple, and 175mm shares outstanding.
- I recommend investors keep in mind the significant change that has already occurred underneath the surface over the past 18 months.
- Given commentary from the management team, I find no reason to believe that the new board and CEO will slow down their efforts to unlock value and produce earnings.
- This report contains updates on the most recent quarter and more details on my price target.
It's been about a year and a half since I first wrote that there is significant value within the SendTech and Presort segments at Pitney Bowes Inc. ( PBI ) and that the global e-commerce segment was dragging the company down. Since then:
- Hestia Capital spearheaded a proxy contest to make significant changes in the management team and board, the details of which are very well covered at this point.
- Hestia won 4 of 9 board seats at the 2023 annual meeting.
- Former CEO Marc Lautenbach stepped down while Jason Dies, who primarily oversaw the SendTech Solutions and Presort segments, was appointed interim CEO.
- There was another board change in which Mary Guilfoile stepped down as chair and Bill Simon and Jill Sutton were added as independent members.
- The company entered into a cooperation agreement with Hestia, completely solidifying Hestia's influence on the business.