BMO Raises Price Target On Markit Following Investor Meetings

BMO reiterated its Outperform rating and raised its price target by $2 to $43 on Markit Ltd (NASDAQ: INFO) after the management meetings suggested that the company could achieve its merger synergies earlier than expected.

"While management reiterated its prior targets of $125 million in annualized cost savings and $100 million in annualized revenue synergies by F2019, we believe the slope of reaching these targets could occur earlier than expected," analyst Jeffrey Silber wrote in a note.

Notably, the company has already begun to generate small revenue synergies in just the few weeks as a combined entity.

Silber said management repeated its long-term targets of mid-single-digit revenue growth and low- to mid-40 percent EBITDA margins. In addition, it was "adamant" about hitting its F2017 adjusted EPS goal of 20 percent growth (about $2.08) and mid-teens growth thereafter.

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"We believe the combined company is much better protected in the next economic downturn, as the major end-markets — financial services, automotive and energy — may have their own cycles and we likely have already been through the energy downturn," Silber added.

Justification And A Look Ahead

For 2016, Silber projects EPS of $1.75 on revenue of $2.754 billion, and 2017 EPS of $2.05 on revenue of $3.611 billion.

At time of writing, shares of Markit were up 0.85 percent on the day, trading at $36.87. The revised target of $43 implies a potential upside of about 18 percent over Thursday's close.

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