We have maintained our Neutral recommendation on Amdocs Ltd (DOX), as its bottom line meets the Zacks Consensus Estimate while the top line beats the same in the recently concluded quarter.
Why Remains Neutral?
Amdocs is well positioned with the largest customer base and the broadest product line in the industry, including a full suite of end-to-end solutions for both Business Support Systems (:BSS) and Operations Support Systems (:OSS). Business in North America was comparatively strong with Europe showing signs of improvement. Furthermore, the emerging Asia Pacific markets are witnessing double-digit revenue growth.
Huge opportunities remain with Amdocs as more telecom companies have started deploying 3G and 4G networks. Since the telecom industry is moving toward tiered and usage based billing, we believe the innovative real-time converged billing system of Amdocs will receive increasing market traction.
Despite these positives, Amdocs is exposed to the global economic downturn, particularly those events that affect the telecommunications industry. Macroeconomic scenario is yet to fully come out of the turmoil. Delay in business transformation on the part of carriers may reduce capital spending.
Moreover, economic and political uncertainty in Europe may jeopardize the company’s financials going forward. Furthermore, as the company is operating globally, it is also exposed to foreign currency exchange rate risk.
Currently, Amdocs has a Zacks Rank #3 (Hold).
Other Stocks Outlook in Related Industries
Currently, Unisys Corporation has a Zacks Rank #1 (Strong Buy), ServiceNow, Inc. has a Zacks Rank #2 (Buy) and Convergys Corporation has a Zacks Rank #3, (Hold) for the short term.
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