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Broadridge Financial Solutions, Inc. Message Board

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  • long_or_short_of_it long_or_short_of_it Jun 21, 2000 8:43 PM Flag

    I hope everybodt took note in what gas

    flow estimate on BR yesterday. They rate BR a 1
    with a nine month price target of 55. BR is on F U's
    Analyst Action List.

    They rised the 2000 cash flow
    to 6.95 per share from 6.32. They are leaving 2001
    essentially flat at 6.39.

    In Q3, BR has approx 35% of
    its natural gas hedged at 2.50 per Mcf and in Q4
    approx 22% hedged at 2.50.

    Now, lets talk about
    their modeling assumptions: they assume natural gas
    reference price of 2.75 per Mcf at Henry Hub and crude at
    23 per barrel. They state that for every ten-cent
    change in price of natural gas in 2001, BR's cash flow
    changes by about $.30 per share and for each dollar
    change in the price of a barrel of crude, the cash flow
    changes by $.14 per share.

    If the current spot
    price for ng of $4.05 per Mcf and spot for crude of
    $31.69 was used, BR's 2000 estimated cash flow would be
    approximately $5 higher.

    For valuation purposes, BR is
    being valued on cash flow and has historically sold for
    5 to 12 times cash flow. The nine month target of
    55 is 7.9 times estimated cash flow per

    They comment BR has been a laggard to their peers,
    perhaps because they have been terrible in deepwater
    exploration (zero for nine).

    My comments: The increase
    in the exploration budget may well have brought
    selling based on their track record. The good news to me
    is the increase in the budget should be comfortably
    carried by the additional cash thrown off by the
    favorable pricing environment. However, with every other
    peer achieving some degree of success in exploration,
    in my view a success in this area will go a very
    long way, as I believe failure is built into the
    market price.

69.03+0.03(+0.04%)4:01 PMEDT