Compass Point initiates ‘buy’ on NCR Atleos
Published 12/23/2024, Investing.com -- Compass Point initiated coverage of NCR (NYSE:VYX) Atleos Corp (NYSE:NATL) with a "buy" rating and a price target of $57, citing strong free cash flow growth, market leadership in the ATM sector, and undervaluation relative to peers.
The firm forecasts FCF of $418 million for 2026, implying a market capitalization-to-cash flow multiple of 10 times and representing a potential 74% upside from current levels.
The company holds a 36% share of the ATM market and is well-positioned to benefit from increasing demand for managed and ATM-as-a-service products. Average revenue per unit in its Self-Service Banking (SSB) segment is expected to rise from $5.1 in 2024 to $5.9 in 2026.
Compass Point noted NCR Atleos ' return on invested capital is projected to improve from 6.3% in 2024 to 11.9% in 2026. The company also trades at a 10% discount to peers such as Euronet Worldwide (NASDAQ:EEFT) and Diebold Nixdorf (OTC:DBDQQ), with room for a premium valuation given its focus on free cash flow growth and profitability improvements.
Shares of NCR Atleos could also benefit from a potential share buyback plan as early as mid-2025, the note added.
