Goldman Sachs Trims Estimates & PT On NeuStar Inc.

NeuStar NSR reported 4Q10 revenues of $138.3 mn and operating EPS of $0.41, both in-line. For 2011, management's outlook calls for revenues of $585 mn-$600 mn vs. Goldman's prior estimate of $587 mn, and EBITDA of $244 mn-$254 mn vs. its prior estimate of $258 mn. Goldman raises its 2011-2013 revenues by 1%-2% but lowers EPS by 3%-5% to $1.70/$1.93/$2.18 reflecting lower margins. NSR exited 2010 with solid revenue momentum driven by strength in enterprise services, as underlying metrics, including IIS new customers/upgrades, domain names, and common short codes under management, all exceeded Goldman's forecast. However, in the near-term Goldman expects the shares to mark time for two reasons: a lower margin profile due to investments in new offerings and initial drags from its recent purchase of IP geo-location assets; and the delay of the RFI/RFP process for the NPAC contract potentially weighing on sentiment. Upside risks include faster growth of non-NPAC revenues and higher margins. Downside risks include pricing, slower uptake of services, and loss of large contracts. Goldman Sachs has a $28 PT and Neutral rating on NSR NSR closed Tuesday at $26.95