SSNC - Embedded Expectations Analysis - 2020 08 28
SS&C Technologies Holdings, Inc. (SSNC:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.5x Uniform P/E, implying bearish expectations for the firm. Although management's concerns about operating income, uncertain macroeconomic conditions, and business growth suggest the potential for near-term headwinds, market expectations are overly bearish, suggesting long-term equity upside is likelySpecifically, management may lack confidence in their ability to grow their fund administration services, Intralinks, and Eze business. Furthermore, they may also have concerns about their leverage levels and the new work from home environment. In addition, they may lack confidence in their ability to sustain adjusted operating income improvement, reduce costs by transitioning contractors to employees, and maintain record-high sales in Black Diamond. Management may also be exaggerating the positive revenue impact from their strategic partners, and they may have concerns about FX headwinds and weakness in the health care transfer agency. Finally, management may lack confidence in their ability to find fair priced acquisitions in this environment and accelerate development and innovation
Although management's concerns about operating income, uncertain macroeconomic conditions, and business growth suggest the potential for near-term headwinds, given the firm's dominant market position, market expectations are overly bearish. As such, long-term outperformance is likely warranted for SSNC
SS&C Technologies Holdings is a holding company. Through its subsidiaries, the company is a provider of software products and software-enabled services that allow financial services providers to automate business processes and manage their information processing requirements. The company provides its solutions to clients principally within the institutional asset and wealth management, alternative investment management, financial advisory and financial institutions vertical markets. In addition, the company's clients include commercial lenders, real estate investment trusts, corporate treasury groups, insurance and pension funds, municipal finance groups and real estate property managers.
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