Morgans assesses the acquisition of Wells Fargo’s Corporate Trust Services (WFCT) business positively as it makes strategic sense and appears highly accretive. WFCT is a top four player in the US corporate trust market.
The analyst highlights the acquisition significantly increases leverage to rising interest rates (WFCT has US$61bn of client balances), with management believing clear opportunities exist to improve yields by applying Computershare’s treasury strategies.
The broker adjusts FY21-23 EPS forecasts by -5%, -1% and 7%, respectively, to reflect the initial dilution from the capital raising before acquisition accretion kicks in. Morgans raises the price target to $17.10 from $16.20. The Add rating is unchanged.
Sector: Software & Services.
Target price is $17.10.Current Price is $14.99. Difference: $2.11 – (brackets indicate current price is over target). If CPU meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges – negative figures indicate an expected loss).
