Citigroup Raises CheckFree to Buy
Citigroup upgraded CheckFree (CKFR ) to buy from hold.
Analyst Tony Wible says he's maintaining his $1.43 fiscal year 2005 (June) and $1.67 fiscal year 2006 earnings per share estimates and $44 price target for CheckFree, but with an estimated total return of 28%, a buy rating is now appropriate. He says the recent share decline and valuation reflect an overly pessimistic view of the company's ability to effectively manage the 2006 Transpoint contract expiration.
While the impact of the loss of high-margin revenues from the contract will weigh on CheckFree's revenue and EPS growth, Wible expects that CheckFree will manage through these issues with minimal impact, aided by the company's share gains at Wells and reduced spending levels.