On Thursday, DA Davidson raised the price target for NCR (NYSE:VYX) Atleos Corp. (NYSE: NATL) to $48.00, marking a significant increase from the previous $30.00, while maintaining a Buy rating on the stock. The adjustment follows NCR Atleos' first-quarter results for 2024, which led to a refined earnings model by the firm.
Although slight reductions were made to the revenue outlook, the adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) expectations for 2024 remained unchanged, with a slight increase projected for 2025.
The company's performance indicators in its main business segments, Self-Service Banking (SSB) and Network (LON:NETW), indicate strong underlying business fundamentals. These segments are anticipated to contribute to improved financial performance in 2024, despite challenges associated with the company's transition to ATM-as-a-Service (ATMaaS), which aims to increase recurring revenue streams and customer wallet share.
Within the Network segment, NCR Atleos has been focusing on Average Revenue Per User (ARPU), benefiting from favorable transaction trends. This focus, coupled with the company's efforts to optimize its Network footprint, is expected to result in mid-single-digit organic growth and enhanced profitability in this segment for 2024.
The firm's confidence in NCR Atleos is reinforced by the company's evolving execution story, which is seen as a turnaround from its inconsistent performance and stagnant value creation in the years following Mark Hurd's departure to HP (NYSE:HPQ).
The updated price target of $48 reflects a 7.0x enterprise value to EBITDA multiple based on DA Davidson's 2025 adjusted EBITDA estimate for NCR Atleos.
InvestingPro Insights
The recent price target increase for NCR Atleos Corp. by DA Davidson aligns with some of the positive trends observed in the company's recent performance. According to InvestingPro data, NCR Atleos has shown a strong return over the last week with a 17.98% price total return, and this momentum extends over the last month and three months with returns of 26.39% and 20.73%, respectively. These figures suggest that investor confidence in the company's business strategy, including its transition to ATM-as-a-Service, is growing.
Two InvestingPro Tips that may be of interest to investors considering NCR Atleos include the expectation for net income growth this year and the company's trading near its 52-week high, which is reflected in the stock price being at 99.81% of its 52-week high. These insights indicate that while the stock is performing well, it may also be in overbought territory according to the RSI, suggesting investors should monitor for potential price corrections.
For those looking to delve deeper into NCR Atleos' financials and future prospects, there are additional InvestingPro Tips available. By using coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights.
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