© Reuters. Broadridge (BR) a Largely ‘Low Value-Added’ Business – Spruce Point Capital
By Sam Boughedda
Spruce Point Capital Management released a report on Broadridge (NYSE:) Wednesday, stating it has a Strong Sell opinion on the stock, which is “largely a low value-added business.”
In the in-depth report, Spruce Point explains that Broadridge is considered “an S&P 500 component that we believe is highly misunderstood to be a defensive financial technology leader with SaaS-like qualities.”
“In reality, we believe it is largely a low value-added business process outsourcer (BPO) with rising financial stress, and has dubious technology prowess,” added the short-selling firm.
It wrote that it believes Broadridge is currently experiencing “growing pressures” and has “wasted over $1.0 billion in a struggling technology partnership with UBS Wealth Management Americas.” In addition, Spruce feels the partnership lacks economic viability.
“BR promotes itself as a “Global Fintech Leader.” But in reality, we believe at least 40% of its revenues are tied to mundane, low-value added business process outsourcing (BPO) activities such as printing and distributing credit card statements and financial documents, some of which carries literally no margin,” argued Spruce Point. “BR promotes its “Recurring Revenue” but we don’t believe it is high quality or worthy of a premium multiple to other financial technology peers.”
Broadridge shares are down over 2% early Wednesday.
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