On Monday, Oppenheimer maintained its Outperform rating and $19.00 price target for NCR Voyix (NYSE: NYSE:VYX), a company specializing in retail and restaurant solutions. The reaffirmation follows the firm's recent sale of its Digital Banking business for $2.45 billion. Management plans to use these funds to significantly reduce debt to approximately 2 times leverage.
The sale is part of NCR Voyix's strategy to become a pure-play leader in its core markets. The company's CEO, David Wilkinson, discussed this strategic move during Oppenheimer’s 27th Annual Technology, Internet & Communications Conference. According to management, the transaction will allow the company to concentrate on its foundational software and services.
The deal with Ennoconn, a new Original Design Manufacturer (ODM) agreement, is set to further enable NCR Voyix to focus on its primary offerings. This shift comes as the company experiences ongoing hardware challenges in its Retail and Restaurants segments. Despite these headwinds, software growth is reportedly meeting the company's expectations.
The financial strategy to deleverage follows the divestiture, indicating a move towards a more financially stable and focused company. NCR Voyix's emphasis on its core competencies in software and services is expected to solidify its position in the market, especially in the Retail and Restaurants sectors where it aims to be a leading provider.
In other recent news, NCR Voyix has made significant advancements in its strategic shift towards software and services. The company reported a 5% increase in normalized software revenue in Q2 2024, while services revenue saw a slight 2% decrease. NCR Voyix also sold its Digital Banking business for $2.45 billion as part of a broader strategy to reduce debt, which included a partnership with Ennoconn Corp. for hardware solutions and a cost-saving program that cut 800 jobs.
In addition to these developments, NCR Voyix is focusing on platform conversions, market share growth, and investments in its Voyix commerce platform. The company aims to achieve a 20% EBITDA margin and 40% free cash flow conversion by 2025. Furthermore, NCR Voyix updated its 2024 outlook with pro forma revenue of approximately $2.15 billion and pro forma adjusted EBITDA of approximately $430 million.
InvestingPro Insights
As NCR Voyix (NYSE: VYX) streamlines its operations to concentrate on its core software and services, a real-time look at the company's financial metrics can provide additional context for investors. According to InvestingPro data, NCR Voyix has a market capitalization of $1.76 billion, highlighting its substantial size in the retail and restaurant solutions sector. Despite a significant revenue growth of 108.31% over the last twelve months as of Q2 2024, the company faces challenges as reflected by a recent quarterly revenue decline of 7.4%. This could be indicative of the hardware challenges mentioned, as well as the need for a strategic refocus.
InvestingPro Tips suggest caution, noting that the stock is currently in oversold territory according to the RSI, and analysts have revised their earnings expectations downwards for the upcoming period. These insights, coupled with the fact that analysts do not anticipate the company to be profitable this year, may influence investor sentiment. For those looking for a deeper dive into the company's prospects, InvestingPro offers additional tips and metrics to help make informed decisions.
Furthermore, the company's stock price has experienced volatility, with a significant hit over the last week and poor performance over the last month. It's also worth noting that NCR Voyix does not pay a dividend, which could be a factor for income-focused investors. With the next earnings date set for November 7, 2024, investors will be keenly watching how the company's strategic moves impact its financials. For a comprehensive analysis, including more InvestingPro Tips, interested parties can visit the InvestingPro platform.
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