Acxiom Maintained at Neutral - Analyst Blog
13 July 2012 - 12:15AM
Zacks
We reiterate our Neutral
recommendation on Acxiom Corporation (ACXM). A
proactive stance on advancing the company’s core competency areas
and incipient buy-back activities are likely to partially
neutralize the effects of the weak economic condition and ominous
competition prevailing in the industry.
Acxiom has achieved a formidable
position in the field of marketing services and technology. The
company’s diversified product offerings such as AbiliTec Digital,
InfoBase-X, Customer Data Integration (CDI) services and customer
recognition software provide Acxiom a high competitive edge in this
industry which includes big players such as Fair Issac
Corp. (FICO), Camelot Information Systems
Inc. (CIS) and CoStar Group Inc.
(CSGP).
One aspect which has forever been
an integral part of Acxiom’s total approach is its desire to return
optimum value to its shareholders through buy back activities. The
company has already repurchased 6.1 million shares at nearly $71
million till now in its fiscal year 2012. In addition, Acxiom has
also recently declared that it has raised the amount pertaining to
its share repurchase plan to a total of $150 million. Hence, on the
basis of the company’s existing trends we can expect similar moves
on the part of it in the upcoming quarters as well.
The company has taken several
initiatives for emphasizing its core competency areas more with
heavy investments and product launches which are perceived to be
the growth drivers in the coming quarters for Acxiom. The company’s
recent prestigious contract wins from Horizon Healthcare Services
Inc. and Mindshare are also expected to positively influence
Acxiom’s upcoming financial performances.
Although Acxiom’s intent and
advances towards meeting long-term goals are remarkable, we are,
however, concerned about the clouded fiscal scenario prevalent in
the world today which may negatively affect the company. Acxiom is
very much vulnerable to several factors such as adverse foreign
exchange movements and inflationary pressures which can be
detrimental to the company’s earnings and margins.
We recently observed quite a few
changes in the company’s top-level management. The first of these
changes was the appointment of Scott Howe as the new CEO and
President. Second, Warren Jenson was also appointed as an Executive
Vice President in the company. Such management shifts may have a
pervasive impact on Acxiom’s overall functioning, goals and
investor perception. Moreover, the company’s increasing focus on
its core areas required high investments, due to which management
declined its EPS projections for the upcoming fiscal year 2013 to a
range of $0.55 - $0.65.
Hence, until the situation
ameliorates and a brighter picture appears on the scene, we
consider it wise to maintain a sideline stance on Acxiom. In the
short run, we have a Zacks #3 Rank on the stock which translates
into a short-term ‘Hold’ rating.
ACXIOM CORP (ACXM): Free Stock Analysis Report
CAMELOT INF-ADS (CIS): Free Stock Analysis Report
COSTAR GRP INC (CSGP): Free Stock Analysis Report
FAIR ISAAC INC (FICO): Free Stock Analysis Report
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