December 4, 2023

Needham analyst Kyle Peterson reiterated a Purchase score on Donnelley Monetary Options, Inc. DFIN, elevating the value goal to $65 from $56.

The analyst applauds the corporate’s vital focus and progress within the software program enterprise, with core choices seeing elevated adoption.

In software program, Peterson believes that the expansion has been broad-based, with merchandise comparable to Arc Suite, Venue, and Energetic Disclosure all performing nicely. 

The analyst fashions 4.5% software program income development in FY23 and 6% development in FY24.

The analyst writes that DFIN’s transition away from print enterprise in the direction of software program has been useful for margins and effectivity. 

Whereas margins have compressed as a consequence of weaker capital markets exercise, Peterson expects margins to enhance steadily in FY24 and past. 

The analyst tasks ~100 bps of EBITDA margin enlargement in FY24, believing margins may very well be upside if capital markets exercise improves.

Peterson added that as macro circumstances enhance, software program development can speed up via elevated adoption, new brand wins, and pricing features.

As well as, the latest uptick in capital markets exercise will profit DFIN from a transaction-fee perspective and the “creation” of further sticky income via recurring compliance software program and providers.

The analyst raised FY23 income estimates to $800.7 million from $796.9 million.

For FY24, the analyst raised the income estimate to $831.5 million from $824.2 million.

Worth Motion: DFIN shares are buying and selling larger by 3.62% to $55.77 on the final checked Friday.

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