We reiterate our Neutral recommendation on
). The company's continuous contract wins and incipient buy-back
activities are likely to partially neutralize the effects of the
weak economic condition and tough competition prevailing in the
The company's diversified product offerings such as AbiliTec
Digital, InfoBase-X, Customer Data Integration (CDI) services and
customer recognition software provide a competitive edge in this
industry, which includes big players such as
Fair Issac Corp.
Camelot Information Systems Inc.
CoStar Group Inc.
The company has taken several strategic initiatives to improve
its core competency areas through heavy investments and product
launches, which are perceived to be its key growth drivers. The
company's recent prestigious contract win from Mindshare and its
association with Yahoo!7 are expected to boost business going
The company is continuously expanding its operations across many
regions including Brazil, South Korea and Norway for enhancing its
long-term margins. Going forward, it is likely to be highly
benefited by the well-diversified business portfolio in terms of
geographies, products and markets.
Acxiom repurchased a total of 2.4 million shares worth $33
million during the first quarter of fiscal 2013. Additionally,
since August, 2011, it bought back 8.1 million shares worth
approximately $100 million. The buying back of common shares is
likely to be one of the best strategic moves, which will help
enhance investor confidence.
Although Acxiom's intent and advances towards meeting long-term
goals are impressive, we are, however, concerned about the overall
economic turmoil and inflationary pressures, which might have
detrimental effects on the company. As the company earned a huge
portion of revenue from the financial sector, the current slowdown
in the financial services is expected to adversely impact its
Acxiom highly depends on its AbiliTec software technology.
Consequently, the company has to advance its technological services
in order to compete in the industry, which appears to be
We observed quite a few changes in Acxiom's top-level
management. Such management shifts may have a pervasive impact on
the company's overall functioning. It takes time for a company to
stabilize after such important changes and, therefore, it would be
advisable for investors at this point not to purchase its shares
before assessing the performance of the company.
The company projects earnings per share (EPS) to lie within a
range of 60 cents - 65 cents bearing onuses of product innovation
strategies for the upcoming fiscal 2013. The company also
anticipates that its revenue from continuing operations will either
remain flat or decline marginally during the fiscal 2013. Revenues
are also projected to be down by 5% in the second quarter of fiscal
2013 owing to the low yields in Acxiom's IT Infrastructure
Management and Other Services segments.
Hence, until the situation improves, we consider it wise to
remain on the sidelines. In the short run, the stock bears a Zacks
#2 Rank, which translates, into a short-term 'Buy' rating.
ACXIOM CORP (ACXM): Free Stock Analysis Report
CAMELOT INF-ADS (CIS): Free Stock Analysis
COSTAR GRP INC (CSGP): Free Stock Analysis
FAIR ISAAC INC (FICO): Free Stock Analysis
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