Broadridge Wins New Deal - Analyst Blog
October 03 2011 - 1:00PM
Zacks
Broadridge Financial Solution (BR) recently
secured a contract from Societe Generale, for providing technology
and outsourcing services to the latter’s U.S. broker-dealer, SG
Americas Securities, LLC.
Through this deal, Societe Generale intends to support the
growth of its businesses in the U.S.. The deal will enable
Societe General to utilize Broadridge's industry-leading
institutional securities processing platform, as well as its
Business Process Outsourcing (BPO) solution.
Societe Generale has chalked out a growth plan for its U.S.
business, which will facilitate the development of its fixed income
business and will enable it to emerge as a Primary Dealer. The plan
is expected to be operational in February 2011.
Broadridge's proven fixed income solution that has utilized over
81.0% of the Primary Dealers who outsource and is quickly becoming
the de facto industry standard for any firm trading fixed income
securities.
The company is growing both organically and inorganically. Its
inorganic growth plan is supported by the acquisition of investment
management solutions provider, Paladyne Systems for a sum of $76.5
million, subject to various adjustments. The acquisition will help
Broadridge to enhance its presence in the buy-side market.
Paladyne Systems' platform provides asset managers, fund
administrators and prime brokers with customized applications to
streamline and manage their businesses effectively. With this
acquisition, Paladyne System will operate within Broadridge’s
Securities Processing Solutions division. Broadridge will use
Paladyne’s capabilities to provide services to hedge funds,
brokerages and asset managers among others.
However, we believe that the continued weakness in mutual fund
event-driven revenue and associated distribution revenue will lead
to lower top-line growth for Broadridge in the coming quarters.
Although strategic acquisitions and potential product launches
are positive for the company, management’s commentary on lackluster
event-driven mutual fund proxy revenue keeps us on the
sidelines.
A number of drivers will result in earnings growth over the next
two years. Moreover, strategic acquisitions are expected to
continue, so will enhance revenues going forward.
Stiff competition from HD Supply, DST Systems
Inc. (DST) and State Street Corp. (STT)
concern us.
Currently, Broadridge has a Zacks #3 Rank, implying a short-term
Hold recommendation.
BROADRIDGE FINL (BR): Free Stock Analysis Report
DST SYSTEMS (DST): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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