On Wednesday, RBC Capital adjusted its outlook on shares of NCR Voyix (NYSE:VYX), reducing the price target to $16 from $19, while maintaining an Outperform rating on the company's stock. The adjustment follows NCR Voyix's second-quarter earnings report, which revealed revenues falling short of Wall Street's expectations. However, the company's adjusted EBITDA was in line with analyst predictions.
The shortfall in revenue was attributed to year-over-year declines in both the Restaurant and Retail sectors of the business. Despite these setbacks, NCR Voyix's financial performance was supported by cost-saving measures which helped to mitigate the impact of the revenue decrease.
In addition to the earnings report, NCR Voyix announced a significant move with the sale of its Digital Banking segment. The transaction, valued at $2.45 billion in cash, is anticipated to be finalized by the end of the fiscal year 2024. This divestiture is part of the company's strategic realignment.
Moreover, NCR Voyix has entered into a new commercial agreement concerning its hardware operations. The company also disclosed an incremental cost alignment program, which is expected to further streamline operations and reduce expenses. These initiatives are designed to bolster the company's financial position and operational efficiency moving forward.
The sale of the Digital Banking segment represents a notable change in NCR Voyix's business structure and is a key factor in RBC Capital's analysis. The firm's maintained Outperform rating indicates a continued positive outlook on the stock despite the recent challenges and adjustments.
In other recent news, NCR Voyix is reportedly exploring the sale of its Digital Banking business, a move that could potentially generate up to $3 billion. The company has engaged advisors for the possible divestiture, with interest already shown by strategic and private equity bidders.
This development comes in the wake of NCR Voyix's separation from NCR Corp, with the former focusing on digital commerce operations. The Digital Banking division is expected to generate around $220 million in EBITDA this year, contributing about 20% to NCR Voyix's revenue.
Stifel has reiterated a Buy rating on NCR Voyix, maintaining a steady price target of $16.00. The firm's analysis suggests that the sale could simplify the company's structure and potentially enhance value for shareholders, with proceeds likely to be directed towards reducing company debt. In contrast, RBC Capital has reduced NCR Voyix's price target to $19, while still maintaining an 'Outperform' rating.
On the product front, NCR Voyix has launched Aloha Pay-At-Table, a service aimed at streamlining dining payments, which has reportedly been beneficial to servers and restaurant operators. These are among the recent developments that reflect NCR Voyix's strategic efforts to optimize its operations and financial performance.
InvestingPro Insights
As NCR Voyix navigates through its strategic realignment, including the sale of its Digital Banking segment, real-time data from InvestingPro provides further context to the company's financial health and market performance. With a market capitalization of approximately $1.7 billion and a significant revenue growth of 32.82% in the last twelve months as of Q1 2024, the company demonstrates robust top-line expansion. However, this growth is contrasted by a recent quarterly revenue decline of 5.9%.
InvestingPro Tips for NCR Voyix suggest caution due to signs of volatility: the stock is experiencing a significant downturn, trading near its 52-week low and showing a one-week price total return of -20.68%. Analysts have also revised their earnings estimates downwards for the upcoming period, indicating potential concerns about future profitability—although analysts predict the company will become profitable this year. It is worth noting that NCR Voyix does not pay a dividend, which may influence investment decisions for income-focused shareholders.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips on NCR Voyix, which can be found at: https://www.investing.com/pro/VYX. These insights can provide valuable information for making informed investment decisions in light of the company's recent earnings report and strategic developments.
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