Broadridge Financial Solutions’ Earnings and Risk Factors

New York-based Broadridge Financial Solutions (BR) serves the financial services industry with investor communications and other technology-based solutions. It recently completed the acquisition of Itiviti for $2.6 billion and has agreements with Jordan & Jordan and Alpha Omega as it expands and diversifies its business.

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Let’s take a look at Broadridge’s latest financial performance and risk factors.

Broadridge’s Q4 Financial Results and Fiscal 2022 Outlook

The company reported a 12% year-over-year increase in revenue to $1.53 billion in Q4 ended June 30, beating consensus estimates of $1.47 billion. Adjusted EPS of $2.19 increased 2% year-over-year and matched consensus estimates.

For the fiscal full-year 2021, revenue increased 10% to $4.99 billion. Adjusted EPS of $5.66 increased 13%. Recurring revenue contributed the bulk of Broadridge’s overall revenue in both the quarter and the full year. (See Broadridge stock charts on TipRanks).

The company plans to distribute a quarterly dividend of $0.64 per share on October 5, which reflects an 11% increase in the annual dividend to $2.56 per share.

Broadridge issued Fiscal 2022 guidance and estimates recurring revenue to grow in the range of 12% – 15%. Adjusted EPS is forecast to grow between 11% and 15%.

Broadridge’s Risk Factors

The new TipRanks Risk Factors tool shows 25 risk factors for Broadridge. The company has amended its risk profile to introduce a new risk factor under the Finance and Corporate category in its Fiscal 2021 annual report.

Broadridge cautions investors that its acquisition of Itiviti led it into more debt. It now carries more than $3.91 billion in debt and has $1.39 billion remaining in its revolving credit facility. The company warns that the terms of its debt could limit its ability to secure additional financing in the future for acquisitions or working capital. Furthermore, Broadridge says that if its credit rating were to be downgraded, its borrowing costs could increase, and its relationships with clients could be adversely affected.

Tech and Innovation is Broadridge’s largest risk category, accounting for 28% of the total risks. That is above the sector average of 13%. Broadridge’s shares have gained about 14% since the beginning of 2021.

Analysts’ Take

Following Broadridge’s earnings report, Raymond James analyst Patrick O’Shaughnessy reiterated a Buy rating on BR stock and raised the price target to $187 from $185. O’Shaughnessy’s new price target suggests 7.25% upside potential.

The analyst commented, “Broadridge continues to benefit from a favorable macro backdrop, with elevated retail equity ownership boosting regulatory communication revenues and robust trading activity supporting post-trade processing revenues.”

Consensus among analysts is a Moderate Buy based on 2 Buys. The average Broadridge price target of $184 implies 5.53% upside potential to current levels.