AI, Technology, And Canadian Expansion Will Drive Future Opportunities

Key Takeaways

• Investments in technology and product innovation are boosting long-term margin expansion and earnings potential.
  
• The SIS acquisition strengthens Broadridge's position in Canada's wealth market, enhancing revenue through upselling existing solutions.
  Of course, please provide the financial narrative for Broadridge Financial Solutions so that I can create the summary based on the details you provide.

Catalysts

Provides investor communications and technology-driven solutions for the financial services industry.

• Broadridge is positioned to capitalize on democratizing and digitizing investing, simplifying capital markets, and modernizing wealth management, which is driving optimism for strong future revenue growth.
  
• The company is benefiting from strong organic revenue growth driven by new sales and continued equity position growth, supporting expectations for increased revenue.
  
• Broadridge's investments in technology, AI, and product innovation are expected to support long-term margin expansion and enhance earnings potential.
  
• The SIS acquisition is expanding Broadridge's presence in the Canadian wealth management market, creating opportunities for revenue growth through upselling existing solutions.
  
• Broadridge's healthy sales pipeline and record event-driven revenues from governance activities are expected to contribute to strong recurring revenue and adjusted EPS growth, positively impacting earnings.

Broadridge Financial Solutions Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Broadridge Financial Solutions's revenue will grow by 5.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 11.4% today to 14.2% in 3 years time.
• Analysts expect earnings to reach $1.1 billion (and earnings per share of $9.66) by about April 2028, up from $759.1 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 29.5x on those 2028 earnings, down from 36.2x today. This future PE is greater than the current PE for the US Professional Services industry at 19.7x.
• Analysts expect the number of shares outstanding to decline by 0.98% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.6%, as per the Simply Wall St company report.

Broadridge Financial Solutions Future Earnings Per Share Growth

Risks

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Valuation

• The analysts have a consensus price target of $243.926 for Broadridge Financial Solutions based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $275.0, and the most bearish reporting a price target of just $220.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.9 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 29.5x, assuming you use a discount rate of 6.6%.
• Given the current share price of $235.0, the analyst price target of $243.93 is 3.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.