5 Huge Analyst Calls: Citi Was 'Wrong' on AMD, Upgrades to Buy; ZoomInfo Slashed
Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week: upgrades for Verra Mobility, AMD, Wingstop, and Generac Holdings, and a downgrade for ZoomInfo Tech.
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What happened? On Monday, Deutsche Bank upgraded Verra Mobility (NASDAQ:VRRM) to Buy with a $26 price target.
What’s the full story? Deutsche Bank raised its rating and price target for VRRM, citing strong travel demand, new legislation for traffic enforcement, and attractive valuation. The analyst expects VRRM to outperform in both commercial and government segments, and sees potential upside in the latter. Deutsche also noted the company’s efforts to reduce debt and risk. Still, the bank warns of customer concentration as a key downside risk.
The analysts boosted their price target for VRRM to $26 based on higher estimates for future years.
Deutsche uses a discounted cash flow model to derive its price target, which implies a 20x P/E ratio and an 11.8x EV/EBITDA ratio. The bank factors in steady revenue growth, margin improvement, and reasonable assumptions for cost of capital and terminal growth. However, the analysts are also cautious about various downside risks, such as macroeconomic factors, market demand, revenue timing, competition, customer concentration, technology, legal, and leverage issues.
A Buy at Deutsche Bank means:
Based on a current 12-month view of TSR, we recommend that investors buy the stock.
How did the stock react? At 6:21am in New York, shares spiked about $0.60 higher to hit $20.97, a rise of nearly 3% in the premarket session. Shares pushed to the $21 handle minutes after the regular open, and ended the day
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