2023-10-03 09:36:33 ET
UBS said the multi-faceted strategy of CDW ( NASDAQ: CDW ) and its diversification of portfolio should generate a more consistent profit stream for the IT solutions provider.
The brokerage started rating the stock with a “buy” and put a target price of $237, implying an upside of nearly 17% to its last close.
“We forecast CDW revenue to increase at least ~6% in CY24E following a 6% decline in CY23E as end-markets recover above US IT spending over the long-term,” said UBS analyst David Vogt in a note, adding that acquisitions, including the $2 billion deal for Sirius, have been a key revenue driver adding at least a point to the CAGR ((Compound annual growth rate)).
Vogt further said the company’s share price appreciation is expected to be driven by growth, financial discipline, and balance sheet optionality rather than multiple expansion.
Vernon Hills, Illinois based CDW is up 1.7% at $204.47 on Tuesday.
Analysts are bullish on the stock, with Seeking Alpha analysts and Wall Street rating the stock a “buy”. However, Seeking Alpha’s Quant rating considers the stock a “hold” with a score of 3.36.
The company, which has a market value of $27.05 billion, has gained about 12% so far this year.
Earlier in August, CDW reported quarterly results that easily topped estimates, helped by a rise in sales in the company's public segment - under which it provides IT services to governments and healthcare and educational organizations.
More on CDW
- 3 Reasons On Why I Like CDW Corporation
- CDW stock jumps 5% after co beats Q2 revenue estimate by $250M
- CDW falls as Barclays sees improving revenue mix offset by macro, PC pressures
For further details see:
CDW’s multi-faceted strategy, diversification to drive profit, says UBS