Why is Amdocs Limited (DOX) a Top Analyst Pick?

Several top analysts over the past month have either upgraded or reiterated their buy rating on Amdocs Limited (NASDAQ:DOX), a leading provider of billing and customer care (BCC) solutions to large telecommunications carriers. Analysts with Goldman Sachs upgraded the stock to a Buy, seeing a 21% upside potential to the current price level. In the note to investors, the analysts noted:

“We upgrade Amdocs to Buy from Neutral with 21% upside from current levels. We believe the stock should outperform as: 1) DOX’s significant firepower (net cash of $1.2 bn+ optionality to lever up) should allow the company to enhance shareholder returns though value creating M&A and accelerated share buybacks and dividends, 2) in spite of tough end market conditions in the Telecom vertical, we expect Amdocs to continue to increase its wallet share with existing and new clients based on its strong product portfolio, and 3) at 13.1X, the stock is trading at an attractive ~22% discount to peers despite comparable earnings growth.”

Goldman has a price target of $56 on Amdocs Limited (DOX) , indicating a 20% upside to the last closing price of the stock.

Similarly a month ago Shaul Eyal with Oppenheimer reiterated their Buy rating on Amdocs and a $52 price target. In the note to investors, Eyal noted:

“DOX hosted its 2014 Investor Day in New York City yesterday. The company is leveraging superior win rates and longstanding customer relationships into faster-than-market growth, highly visible backlog and strong recurring revenues, generating robust free cash flows and stable-to-improving profitability. We believe these attributes should drive multiple expansion (shares are trading at ~13x our 2016E EPS of $3.53), and we reiterate our Outperform and $52 target.”

According to TipRanks.com, Eyal is ranked 278 out of 3440 analysts that the website tracks. He has a success rate of 68% and the stocks he follows receive an average annual return of 10.9%. Eyal’s outlook on the stock would indicate a 11.4% upside to the last closing price.

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