Tech Services Firm CDW Outpacing Overall IT Market
Tech services firm CDW ( CDW ) is on a path to outperform the broader information-technology market, RBC Capital Markets said Wednesday. “CDW continues to buck broader IT market trends,” RBC analyst Amit Daryanani said in a research report. Late Wednesday, CDW reported first-quarter sales and earnings that beat Wall Street’s estimates. The Lincolnshire, Ill.-based company earned 67 cents a share excluding items, up 20% year over year, on sales of $3.12 billion, up 13%. Analysts were looking for EPS of 65 cents and sales of $3.1 billion. It was CDW’s fifth straight quarter of double-digit EPS growth and third straight quarter of accelerating sales growth year-over-year. CDW is a value-added reseller of computer gear and provider of tech services. The company maintained its full-year guidance of organic revenue growth 200 to 300 basis points above projected U.S. IT growth of 2% to 3%, as well as double-digit EPS growth, Daryanani said. “Fundamentally, we continue to think CDW remains well-positioned relative to other IT solutions vendors, given ongoing global macro softness,” he said. Daryanani reiterated his outperform rating on CDW stock, with a price target of 46. CDW shares fell a fraction, to 40.48, on the stock market today . The stock is forming a cup-with-handle base, with a 43.21 buy point, but it closed below the key 50-day line for a fifth straight trading day. Baird analyst Jayson Noland on Wednesday reiterated his neutral rating on CDW stock, but raised his price target to 45 from 40. “CDW posted solid Q1 results and reiterated full-year expectations of growth above the broader IT market,” Noland said in a report. “The company continues to execute well despite a cautious demand environment and there is significant runway left for profitable share gains. Given the climate of macroeconomic uncertainty and, more so, valuation, we see risk/reward as balanced at current levels.”