Trinet's Tender Offering Creates A Path For Share Buyback & Dividend Boost: Analyst

Needham analyst Kyle Peterson raised the price target of Trinet Group Inc. TNET to $135 from $120 and maintained a Buy rating. 

The analyst hosted an investor meeting focused on several topics, with macro (exposure to SMB hiring) and capital return initiatives being major.

The analyst expects TNET's CIE to remain muted for the next few quarters on SMBs, remaining cautious on incremental hiring.

Nevertheless, Peterson believes good execution from the sales force will boost strong growth. 

Peterson notes that TNET has recently conducted a tender that will retire around 16% of its shares and plans to return about 75% of free cash flow to shareholders. 

The analyst believes the move will result in additional buybacks and a possible dividend and raised the estimates to reflect the same. 

While Peterson lowered Q3 FY23 EPS estimates to $1.33 (from $1.39) due to the mismatch in timing between the bond offering and the tender, he increased the FY24 EPS estimate by $0.70 to $7.15. The analyst also raised FY23 EPS estimates to $6.90 from $6.80 earlier.

Also Read: TriNet's Momentum Remains Strong Amidst Macro Uncertainty: Analyst Maintains Buy Rating

Price Action: TNET shares are trading higher by 0.61% at $113.69 on the last check Monday.