Broadridge Earnings: Mostly Steady Ahead of Seasonally Strong Fiscal Fourth Quarter

Broadridge’s fiscal third quarter highlighted the firm’s resilience amid an uncertain backdrop in the financial services industry. Revenue of $1.65 billion in the quarter was in line with the FactSet consensus estimate, while adjusted EPS of $2.05 came in slightly ahead of the $2.02 consensus estimate. Broadridge now expects its constant currency recurring revenue growth to come in at the high end of its 6%-9% range while it expects its closed sales to come in near the low end of its $270 million-$310 million range. Broadridge is seeing some elongated sales cycles, particularly in Europe. Given sales commentary for asset manager end markets from firms such as MSCI, FactSet, and S&P Global, this development is not very surprising. Overall, there was little in Broadridge’s financial results that would alter our long-term view of the firm, and we will maintain our fair value estimate of $185 and narrow moat rating. Shares are trading roughly 7 percentage points ahead of the Morningstar US Market Index, which we attribute to investors being relieved that Broadridge is steady amid market turmoil.