With the recent strength of the U.S. dollar, short-term revenue and earnings for Solera (NYSE:SLH) will be under pressure, but that shouldn't stop them from their quest to grow through acquisition.
Needham & Company thinks the strength of the U.S. dollar won't have too much effect upon Solera in the short term, and they'll continue to enjoy strong margins.
Needham said, "We have haircut our out-quarter estimates as the USD has recently appreciated versus the EUR (approximately 50% of Solera’s revenues are denominated in Euros). There is no change to our fundamental outlook. We believe that Solera is poised to continue to drive Adjusted EBITDA margins higher from the 43.9% mark posted in the most recent September quarter. We expect Solera to accelerate the pace of acquisitions between now and the June 2011 quarter as the most recent acquisition of material size was Solera’s October 2009 acquisition of AUTOonline."
Solera is trading at $48.41, falling $0.57, or 1.16 percent as of 12:19 PM EST. Needham has a "Buy" rating on them and a price target of $57, which they lowered from $58.
No comments:
Post a Comment