We have two major firms defending Neustar (NYSE:NSR) this AM:
- Morgan Stanley notes they are surprised by the magnitude of the sell-off in NSR shares – down 25%. While they were disappointed by the 2008 guidance, mainly as it pertains to transactions volume, they believe the stock is oversold at these levels -- particularly relative to Neustar’s 20% long-term sustainable growth and unique industry positioning.
The stock is now trading at roughly 17x the low-end of management’s EPS guidance of $1.29 for 2008. This multiple is clearly below the company’s long-term growth rate of 20%. MSCO thinks the right near-term price target for the stock is $25-26, with further upside likely over the course of the year as the company executes. This near-term target assumes a P/E multiple of 20x baseline 2008 EPS of $1.29.
In their view, the guidance is very conservative -- they know that this management team is adept at the ‘beat-and-raise’ strategy. Reits Overweight and $40 target.
- Deutsche Bank reiterates Buy and lowers target to $35 from $42 saying they maintain their rating on the strength of its competitive position and view that the market is negatively overreacting to conservative first guidance for FY08.
Notablecalls: With the stock down 8+ points yesterday and these defenses, we're going to see a nice bounce today. Could be 2+ points worth.