Back to top

Analyst Blog

Financial services based technology provider Broadridge Financial Solutions, Inc. (BR - Snapshot Report) recently announced its acquisition of Emerald Connect, LLC for $60 million in cash to cater to the needs of financial advisors.

The acquisition of Emerald Connect, LLC is part of the company’s strategy to build a portfolio of well modified branding, marketing and client communication tools to help them expand their businesses, increase operational efficiency and minimize risks.

Emerald Connect will be a strategic fit for Broadridge, as the business models of both the companies are almost identical. Emerald Connect’s solutions would complement Broadridge's sales, education and client communications capabilities, strengthening its platform and expanding it into the advisory market. Moreover, with this acquisition Broadridge will be able to deliver optimized solutions and a best-in-class experience to all its clients.

Emerald Connect, LLC is a leading provider of solutions-based marketing and technology tools for the financial services industry. The company is owned by an outsourcing solutions provider, StoneRiver Group. This acquisition will help Broadridge to evolve as a financial and outsourcing services provider, which in turn will help to eliminate business risks.

Earlier, Broadridge inked a deal to acquire a fee calculation, billing, and revenue and expense management solutions company – Bonaire Software Solutions, LLC. The acquisition was intended to enhance Broadridge’s market credibility as the automated compliance process offered by Bonaire will eliminate the risks involved in the manual process.

Broadridge has resorted to strategic acquisitions to diversify its offerings and expand its operating markets. The strong cash balance of $240.3 billion in the second quarter of 2014, up from $183.1 million in the previous quarter, enables the company to go for strategic acquisitions.

We believe that Broadridge’s cost reduction initiatives and solid growth in net new businesses are the positives going forward. We remain optimistic on Broadridge’s strategic acquisitions, new product launches, share repurchase program and dividend hikes. We also believe that its close association with Accenture (ACN - Analyst Report) will create long-term opportunities for the company.
 
However, we remain concerned by the pricing pressures caused by significant competition from companies such as Barrett Business Services (BBSI - Snapshot Report) and DST Systems Inc. (DST - Analyst Report).

Currently, Broadridge has a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%