Dun & Bradstreet Corporation (DNB): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
D&B reported mixed first-quarter 2014 results. Although earnings surpassed the Zacks Consensus Estimate, revenues lagged the same. The company provided cautious revenue guidance due to sluggish growth prospect of the core risk management solution business. The company continues to upgrade its core DNBi solution to cloud, which will attract customers over the long term. However, this transition will affect top-line growth in the near term. Moreover, additional investments in cloud upgrade will hurt profitability. Further, a highly leveraged balance sheet and intense competition are the major headwinds. Nevertheless, we believe that D&B's high-margin business model, strong international growth potential, strategic investments, partnerships with Salesforce.com, SugarCRM and First Rain, accretive cloud-based acquisitions and aggressive share buyback will drive growth in the long run. We maintain our Neutral recommendation on the stock and set a price target of $118.00.

Overview:

Based in Short Hills, NJ, The Dun & Bradstreet Corporation (DNB) is a leading provider of commercial information that serves a diverse set of customer needs globally. D&B reported revenues (including revenues from divested business) of $1.66 billion in 2013. The company has two core product lines Risk Management Solutions and Sales & Marketing Solutions.

Risk Management Solutions (63.0% of revenues in 2013) comprise traditional solutions (61.0% of revenues in 2013), Value-Added Risk Management solutions (31.0% of segment revenues) and Supply Management solutions (8.0% of revenues in 2013). The traditional solutions primarily include core DNBi product line, as well database reports, which are used primarily by customers for making decisions about new credit applications. Value-added Solutions generally support automated decision-making and portfolio management. Customers use Supply Management Solutions to better understand the financial risk of their supply chain.

Sales and Marketing Solutions (37.0% of revenues in 2013) comprise the company's traditional solutions, such as marketing lists, labels, education business and electronic licensing solutions (38% of segment revenues). Value-added Solutions (62.0% of segment revenues) offer data management software like Optimizer and D&B360 product platform that integrates data into third-party Customer Relationship Management (CRM) applications.

D&B serves banks and other credit & financial institutions, manufacturers, wholesalers, retailers, government agencies, insurance companies and telecommunication companies, as well as sales, marketing and business development professionals. None of the customers accounted for more than 10% of revenues in 2013.

D&B faces significant competition in most of its geographic markets not only from local information providers but also from the likes of Equifax, Experian, infoGROUP and Graydon.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: CRM , DNB

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