On Friday, Jefferies maintained its Hold rating on SS&C Technologies Holdings, Inc. (NASDAQ: SSNC) with a steady price target of $70.00. The financial services company's recent performance surpassed expectations, yet the forecast for the fourth quarter suggests a potential slowdown. The projected organic growth is set to decelerate by a few hundred basis points quarter over quarter, landing at an estimated 1-4% year over year.
Despite the tempered fourth-quarter guidance, adjustments were made to the company's financial outlook. Jefferies has revised its organic revenue growth prediction for SS&C Technologies for the year 2025, lowering it slightly to 5.0% from the previous 5.4%. This adjustment reflects a more cautious stance on the company's revenue trajectory over the next couple of years.
On a positive note, the adjusted earnings per share (EPS) estimate for SS&C Technologies has been increased by $0.09, reaching $5.79. This improvement is attributed to the benefits arising from the acquisition of Bettea, a financial technology company, as well as a reduction in interest expenses. These factors have provided some upward momentum to the company's earnings outlook.
The analyst from Jefferies concluded with a neutral stance, indicating no significant change in sentiment towards SS&C Technologies following the latest results. The Hold rating suggests that the firm sees no urgent reason for investors to change their positions in the company's stock at this time.
In summary, while SS&C Technologies has delivered a strong performance, concerns about slower growth in the near future have led to a cautious revenue forecast. However, the acquisition of Bettea and lower interest expenses have positively impacted earnings estimates, balancing the overall outlook for the company.
In other recent news, SS&C Technologies Holdings, Inc. has finalized the acquisition of Battea-Class Action Services, LLC for approximately $670 million. This strategic move is expected to enhance SS&C's financial recovery services, with over 100 Battea employees joining SS&C's team. The acquisition is anticipated to be accretive over the next year.
In terms of financial performance, SS&C's Q2 2024 results surpassed expectations, with organic revenue growth of 6.4% and an adjusted diluted earnings per share increase of 17.6% year-over-year. The company's Board of Directors has also approved an increase in the quarterly dividend from $0.24 to $0.25 per share, following reported growth in net cash from operating activities.
Analyst firms Needham and RBC Capital have adjusted their outlook on SS&C, raising their price targets while maintaining positive ratings. These recent developments highlight SS&C's robust financial health and strategic growth initiatives.
InvestingPro Insights
Adding to the analysis provided by Jefferies, recent data from InvestingPro offers additional context for SS&C Technologies' performance and outlook. The company's market capitalization stands at $18.44 billion, reflecting its significant presence in the financial technology sector.
InvestingPro Tips highlight SS&C's impressive track record of dividend growth, having raised its dividend for 7 consecutive years and maintained payments for 11 years. This consistent dividend policy aligns with the company's stable financial position, as noted in the article.
The company's P/E ratio of 26.61 and adjusted P/E of 24.8 for the last twelve months suggest that investors are pricing in future growth, despite the anticipated slowdown mentioned in the Jefferies report. This valuation is further supported by SS&C's strong gross profit margin, which InvestingPro data shows at 49.38% for the last twelve months.
While the article discusses a potential deceleration in organic growth, it's worth noting that SS&C has demonstrated a revenue growth of 5.19% over the last twelve months, with a more robust 6.52% growth in the most recent quarter. This data provides context to the company's performance leading up to the cautious fourth-quarter guidance.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on SS&C Technologies, providing a deeper dive into the company's financial health and market position.
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