ePlus BUY Target Price $65

PLUS : NASDAQ : US$50.01
BUY 
Target: US$65.00 

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
STRONG FUNDAMENTAL GROWTH FROM CLOUD IT BUILD-OUT
Investment recommendation
We reiterate our BUY rating and $65 price target following PLUS’s 1.57
million secondary share offering. We expect PLUS shares to benefit from
the increased public float and we see potential for upside to revenue and
EPS as advanced technology solutions continue to see healthy demand
from big data, mobile device management, security and other drivers.
We are adjusting our estimates off of PLUS’s preliminary MarQ results.
Investment highlights
 PLUS completed a secondary offering of 1,573,913 shares at
$50/share with an option for the underwriters to purchase an additional
236,087 shares. PLUS will repurchase 400,000 shares at $50/share,
lowering the total shares outstanding to 7.6 million shares compared to
the prior 8 million share count.
 PLUS expects MarQ revenue to be in the range of $255 million to
$261 million compared to our prior estimate of $264 million.
Management highlighted the 8% to 10% Y/Y revenue growth was driven
by strong demand for IT products and services from their large
customers. PLUS expects EPS for the MarQ to be in the range of $1.00 to
$1.06, well above our prior $0.81 estimate.
Valuation
PLUS’s price target of $65 is approximately 12x our C2014 EPS estimate
of $4.84 plus net cash of $5.07 per share.

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