Broadridge Expands BPO Services - Analyst Blog

New York-based global outsourcing service provider Broadridge Financial Solutions Inc. (BR) recently completed a major expansion of its outsourcing solutions portfolio. The extended offerings will aid global financial institutions with more flexible access to Broadridge's outsourcing solutions.

In an answer to increasing demand for business process outsourcing (BPO) solutions, Broadridge will now include services beyond its securities processing functions. The newly added services will support back-office, middle-office, corporate and finance operations of global financial services firms.

Securities clearance and settlement, taxation and investment-related operations will be performed by Broadridge's back-office solutions. The middle-office solutions will support customers' account openings and maintenance along with their asset transfers. Corporate and finance solutions will support traditional accounting processes, management reporting, as well as compliance and regulatory procedures.

This new solution suite will enable Broadridge's clientele to step up performance in their existing businesses and also tap new markets. The BPO solutions will also offer continuous process improvement and security, thereby helping clients to cut back fixed costs and reduce infrastructure risks.

Pursuant to the success of these solutions, we believe more new clients will show interest in deploying them, to mitigate increasing business complexities. This, in turn, will drive revenue growth from the company‘s Securities Processing Solutions segment.

Notably, Broadridge recently divested its subsidiary, Ridge Clearing & Outsourcing Solutions Inc. to Penson Financial Services Inc., a subsidiary of Penson Worldwide Inc. (PNSN), to better focus on revenue opportunities associated with securities processing and outsourcing services.

Broadridge reported decent fourth quarter revenues, although net earnings disappointed after considering the effect of discontinued operations. The company expects its revenues to increase modestly by 1% to 4% in fiscal 2011, given persistent softness in demand.

We remain optimistic about Broadridge's strategic acquisitions and potential product launches. However, weaker market activity continues due to the recession, thereby hurting results. This can well be inferred from the weak fiscal 2011 guidance.

We currently have a short-term Hold rating (Zacks #3 Rank) on Broadridge shares.