Acxiom Retains Neutral Rec - Analyst Blog
September 17 2012 - 11:35AM
Zacks
We reiterate our Neutral
recommendation on Acxiom Corporation (ACXM). The
company’s continuous contract wins and incipient buy-back
activities are likely to partially neutralize the effects of the
weak economic condition and tough competition prevailing in the
industry.
The company’s diversified product
offerings such as AbiliTec Digital, InfoBase-X, Customer Data
Integration (CDI) services and customer recognition software
provide a competitive edge in this industry, which includes big
players such as Fair Issac Corp. (FICO),
Camelot Information Systems Inc. (CIS), and
CoStar Group Inc. (CSGP).
The company has taken several
strategic initiatives to improve its core competency areas through
heavy investments and product launches, which are perceived to be
its key growth drivers. The company’s recent prestigious contract
win from Mindshare and its association with Yahoo!7 are
expected to boost business going forward.
The company is continuously
expanding its operations across many regions including Brazil,
South Korea and Norway for enhancing its long-term margins. Going
forward, it is likely to be highly benefited by the
well-diversified business portfolio in terms of geographies,
products and markets.
Acxiom repurchased a total of 2.4
million shares worth $33 million during the first quarter of fiscal
2013. Additionally, since August, 2011, it bought back 8.1 million
shares worth approximately $100 million. The buying back of common
shares is likely to be one of the best strategic moves, which will
help enhance investor confidence.
Although Acxiom’s intent and
advances towards meeting long-term goals are impressive, we are,
however, concerned about the overall economic turmoil and
inflationary pressures, which might have detrimental effects on the
company. As the company earned a huge portion of revenue from the
financial sector, the current slowdown in the financial services is
expected to adversely impact its overall performances.
Acxiom highly depends on its
AbiliTec software technology. Consequently, the company has to
advance its technological services in order to compete in the
industry, which appears to be costly.
We observed quite a few changes in
Acxiom’s top-level management. Such management shifts may have a
pervasive impact on the company’s overall functioning. It takes
time for a company to stabilize after such important changes and,
therefore, it would be advisable for investors at this point not to
purchase its shares before assessing the performance of the
company.
The company projects earnings per
share (EPS) to lie within a range of 60 cents - 65 cents bearing
onuses of product innovation strategies for the upcoming fiscal
2013. The company also anticipates that its revenue from continuing
operations will either remain flat or decline marginally during the
fiscal 2013. Revenues are also projected to be down by 5% in the
second quarter of fiscal 2013 owing to the low yields in Acxiom’s
IT Infrastructure Management and Other Services segments.
Hence, until the situation
improves, we consider it wise to remain on the sidelines. In the
short run, the stock bears a Zacks #2 Rank, which translates, into
a short-term ‘Buy’ rating.
ACXIOM CORP (ACXM): Free Stock Analysis Report
CAMELOT INF-ADS (CIS): Free Stock Analysis Report
COSTAR GRP INC (CSGP): Free Stock Analysis Report
FAIR ISAAC INC (FICO): Free Stock Analysis Report
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