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Research Alert: CFRA Keeps Hold Recommendation On Shares Of Cdw Corporation

05/07/2021 10:31

02:30 PM EDT, 05/07/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We raise our 12-month target to $172 (from $160), 23.5x our '21 EPS estimate, above IT distributors, as shares garner a large premium due to CDW's industry-best profitability and ability to outpace IT markets (300-400 bps in 2021). We lift our '21 EPS estimate to $7.33 from $7.07 and '22's EPS to $7.98 from $7.71. CDW prints Q1 adj-EPS of $1.74 vs. $1.38, topping consensus by $0.21, as benefits from its variable cost structure helped offset a shortfall in gross margin (16.4% vs. 17.4% expected), driven by increased hardware mix. CDW produced net sales of $4.84B (up 10.2% Y/Y), beating consensus by $218M, as Small Business, Corporate, and Health Care outperformed expectations. Q1 results were solid by most measures and included a boosted full-year outlook. However, we think a few items need to go right to meet or exceed outyear targets: 1) supply conditions need to hold up so CDW can work down its elevated backlog, and 2) product mix needs to tilt more towards software (vs. hardware) to buoy gross margin.