ePlus Target Price $65

PLUS : NASDAQ : US$52.96
BUY 
Target: US$65.00 

Source: Interactive Data Corporation
COMPANY DESCRIPTION:
ePlus is a direct marketer and authorized reseller of IT
solutions from several large OEMs, including Cisco, HP,
VMWare, NetApp, EMC, Citrix, Apple, Dell and Microsoft.
The company offers a range of solutions focused on data
center, storage, security, cloud enablement and IT
infrastructure. Headquartered in Herndon, VA, ePlus was
established in 1990 and incorporated in 1996.

Technology — Hardware — Semiconductor Devices and Related
Technologies
GOOD MOMENTUM IN ADVANCED TECH SEGMENT
Investment recommendation
We reiterate a BUY and maintain a $65 price target following results
that delivered upside to our EPS estimates for CQ4. While revenue was
slightly soft, we note that an increase for higher value product and
services drove margin upside. While we are adjusting our estimates
moderately off of Dec Q’s lower base, we see potential for upside to EPS
as advanced technology solutions continue to see healthy demand from
big data, mobile device management, security and other drivers.
Investment highlights
 PLUS reported Q4/13A (Dec) after the close. Revenues and GAAP
EPS were $267.2 and $1.32 compared to our estimates of
$283M/$1.09 and consensus estimates of $283M/$1.06. The 10%
Y/Y revenue growth (down 1% Q/Q) was driven by growth in the
Technology segment up 12% Y/Y (down 2% Q/Q) partially offset by
27% Y/Y (up 15% Q/Q) decline in the Financing segment. EPS of
$1.32 came in above last December’s $1.11 level and was above our
estimate of $1.09 and consensus estimate of $1.06 driven by higher
product gross margins (18.9% vs 17.5% last year) with increased
higher value product and services revenues.
 Management highlighted that they are well positioned to drive
continued growth in 2014 driven by their advanced technology
solutions targeting higher growth big data, mobile device
management, security solutions and software defined networks, and
expect to expand margins with their services-driven growth focus.
Valuation
PLUS’s price target of $65 is 14x our C2014 EPS estimate of $4.33 plus
net cash of $5.07 per share.

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