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Brink's Upgraded To Outperform By Imperial, Sees 15% Upside

Brink's Upgraded To Outperform By Imperial, Sees 15% Upside - Brink's Company The NYSE:BCO

Imperial Capital has upgraded Brink's Company BCO 1.28% to Outperform from In Line after the company reported better-than-expected results for the second quarter, as the new CEO takes personal charge of U.S. operations.

The brokerage also raised the price target by $6.50 to $38, implying a potential upside of 15 percent from the current levels.

Brink's reported second-quarter non-GAAP revenues of $717 million, which were above Imperial estimate of $700 million and above consensus estimate of $699 million. Adjusted EPS of $0.38 topped Imperial as well as consensus estimate of $0.26.

Under new CEO Doug Pertz, management has issued a new FY16 non-GAAP outlook, which "we believe is more manageable and transparent, yet still a substantial task to accomplish over the next few quarters."

The company expects revenues of $2.9 billion, and adjusted EPS of $1.95–$2.10 (vs. $2.00–2.20 prior guidance). Imperial anticipates EPS of $2.03 for 2016.

Meanwhile, Pertz believes U.S. operating margin could approach 5 percent by year-end 2016.

"We believe that the new management team has a positive track record that can be leveraged to help improve Brink's sales and marketing efforts, while also reducing operational costs and improving company-wide margins," analyst Jeff Kessler wrote in a note.

Further, Kessler recommended following four strategic actions that could improve the North American story:

  • "Increasing performing branches in the U.S."
  • "Driving higher revenue."
  • "Changing the revenue mix to higher margin services."
  • "Pursuing better results from filling out and strengthening the U.S. management team."

Noting investors should be patient with the stock, as the analyst said, "Quarter-by-quarter results may be somewhat challenged, however, we believe full-year 2016 and 2017 can provide double-digit growth in operating earnings, EBITDA, and EPS."

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Aug 2016Imperial CapitalUpgradesIn-lineOutperform
May 2015GabelliUpgradesHoldBuy
May 2015Imperial CapitalDowngradesOutperformIn-line

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