On Nov 13, we reaffirmed our Underperform recommendation on
) due to its subdued fiscal 2014 second-quarter performance.
Acxiom carries a Zacks Rank #4 (Sell).
Why the Underperform Recommendation?
On Nov 7, 2013, Acxiom, a major player in the field of
marketing services and technology, announced second-quarter
fiscal 2014 adjusted earnings of 20 cents per share, missing the
year-ago tally by 4.8% and the Zacks Consensus Estimate by a
Net income for the reported quarter dropped significantly by
around 40% to $9.8 million or 13 cents per share. The
year-over-year decline in reported earnings was primarily
attributable to high operating and other expenses.
Total revenue for second-quarter fiscal 2014 came in at $276.3
million, down 0.4% year over year owing to dismal performance in
two of the three segments, namely, the IT Infrastructure
Management Services and the Other Services segments.
Moreover, operating margin declined to 7.1% from 10.9% in the
year-ago quarter due to lower margin from the Marketing and Data
Services segment, which accounted for the bulk of the revenues
(around 73 %).
Management also lowered its revenue guidance for fiscal 2014.
Management now projects revenues to dip marginally versus the
earlier projection of flat revenues. However, earnings are still
expected to remain flat.
In the future, Axciom intends to focus on its core areas of
competency, which include database marketing and services. These
new objectives are likely to involve high investments, which may
adversely affect the company's profits, going forward.
Following the unimpressive fiscal second-quarter results and
soft outlook for the year, estimates were mostly revised
downwards. The Zacks Consensus Estimate for fiscal 2014 and
fiscal 2015 decreased marginally by a cent to 75 cents, over the
last 30 days.
Based on the poor results, bleak guidance by the management
and increased price competition, we have a negative stance on the
Stocks worth looking at in the industry are
CoStar Group Inc.
EPAM Systems, Inc.
). Each hold a Zacks Rank #2 (Buy).
ACXIOM CORP (ACXM): Free Stock Analysis
COSTAR GRP INC (CSGP): Free Stock Analysis
EPAM SYSTEMS (EPAM): Free Stock Analysis
INFOSYS LTD (INFY): Free Stock Analysis
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