Israeli business IT systems and solutions company Amdocs Ltd. (NYSE: DOX) expects revenue growth to continue, with profit per share rising by a slightly higher rate than the increase in its revenue, according to figures published by the company.
Amdocs finished its 2018 fiscal year (ending on September 30, 2018) with a 2.8% increase in revenue to $3.97 billion and a 6.1% rise in non-GAAP net profit to $580 million, $4.03 per share. The company previously announced that it projected 1-5% growth in revenue and 3-7% growth in profit per share in its 2019 fiscal year. Amdocs is now projecting a 2-6% annual rise in its revenue and a 4.5%-8.5% annual jump in non-GAAP net profit in 2019-2021. The projected growth is entirely organic - it excludes any possible acquisitions by Amdocs in these years.
Amdocs, managed by CEO Shuky Sheffer, provides IT solutions and systems for communications companies. Its market cap is $8.5 billion. A presentation for investors published today states that the company's growth strategy for the coming years includes growth engines in its core business, for example support for customers switching to 5G networks and network function virtualization (NFV), as well as geographic expansion and winning new projects in Europe, Africa, Southeast Asia, and Latin America, plus expansion as a transition integrator for its own products.
Amdocs is also planning on expanding into tangential fields, citing Internet of Things (IoT) and advertising as examples. Amdocs also does not rule out acquisitions that could put it into new industries (beyond the communications industry - Amdocs previously attempted to penetrate the financial market, but achieved nothing substantial).
In response to the company's guidance, Oppenheimer analysts Shaul Eyal and Hugh Cunningham reiterated their "Market outperform" recommendation for Amdocs's share with a target price of $77, 28% higher than the current market price. They believe that the company will benefit from a number of communications market growth engines, including the transition to digital communications, 5G, pay television, etc. The analysts say that these changes will increase demand for Amdocs's solutions. They also expect Amdocs to benefit from consolidation among its customers in the sector. Eyal and Cunningham expect Amdocs to distribute a quarterly dividend of $600 million, $0.25-0.285 per share, in 2019, reflecting a 1.9% annual return.
Published by Globes, Israel business news - en.globes.co.il - on December 13, 2018
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