Tech Data reported impressive fiscal second-quarter 2015 results.
Both earnings and revenues comfortably beat the Zacks Consensus
Estimate. We believe that Tech Data will benefit from stabilization
in personal computer sales through the rest of calendar year 2014.
Tech Data's partnership with Google, Vmware, Cisco and Xerox will
drive top-line growth, going forward. Further, the company's
improving execution (particularly in Europe), its superior customer
service and improving market share in the Americas are the major
positives, moving ahead. However, sluggish IT spending will hurt
Tech Data's top-line growth in fiscal 2015. Moreover, results will
significantly depend on sustaining demand for personal computers,
which is a headwind. Thus, we maintain a Neutral recommendation on
the stock and set a price target of $60.00.
Incorporated in 1974 and based in Clearwater, FL., Tech Data
Corporation (TECD) is one of the leading wholesale distributors of
information technology (IT) products, logistics management and
other value-added services. The company distributes and markets
more than 150,000 products from more than 600 manufacturers and
Broadline (notebooks, tablets, desktop systems, printers,
supplies and components) products accounted for 46% of sales in
2014, followed by Data Center (servers, server accessories,
networking products, storage hardware and networking support
services) at 23%, software at 18%, mobility at 9% and consumer
electronics at 4%.
Value added resellers contributed 51% of sales, direct marketers
& retailers 28.0% and corporate resellers 21.0% of sales in
fiscal 2014. The company generated approximately 21.0% of sales in
fiscal 2014 from products purchased from Hewlett-Packard.
Tech Data reported revenues of $26.82 billion in 2014. The
company sells products in more than 100 countries and generates
revenues primarily from two geographical segments: the Americas
(including North and Latin America) and Europe. In fiscal 2014, the
Americas segment reported sales of $10.19 billion (38% of sales),
while Europe reported sales of $16.63 billion (62% of sales).
Tech Data faces significant competition from Ingram Micro Inc.,
Synnex Corp., Arrow Electronics Inc. and Avnet, Inc. along with
some regional and local distributors.
Tech Data Corporation (TECD): Read the Full
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