Broadridge Earnings: Strong Quarter and Position Growth; Outlook Maintained

Broadridge Financial Solutions reported a strong fiscal second quarter. Revenue of $1.59 billion and adjusted EPS of $1.56 beat the respective FactSet consensus estimates of $1.56 billion and $1.49. We attribute the revenue beat to mostly higher event-driven revenue that can be lumpy. Despite the strong quarter, Broadridge maintained its outlook and the stock has had a strong run over the last three months—we believe this accounts for the lack of a meaningful positive market reaction despite a strong quarter. As we incorporate these results, we expect to increase our fair value estimate of $220 by a single-digit percentage, and we will maintain our narrow moat rating. Position growth is coming in ahead of our expectations, and aside from foreign exchange headwinds, we do not see other headwinds and believe that management’s outlook may prove conservative at the midpoint.