J.P Morgan Lowers Estimates On Dun & Bradstreet Corporation

J.P Morgan is maintaining its Neutral rating on Dunn & Bradstreet Corp. DNB. Revenues were in-line while profits were light. EPS was $1.74 v. JPM's $1.88 estimate. There were signs of top-line improvement, and D&B expects results to build into 2011. That being said, a big pivot isn't likely near-term—as the later cycle nature/demand for D&B's products is exacerbated somewhat by phasing of subscriptions. J.P Morgan is a bit alarmed to hear the Tech investment won't be completed until H2,12 with costs now targeted at the high-end of the prior $110-130MM target. Valuation is intriguing at ~13.0 times 2012E EPS. But it is waiting for signs of sustained recovery at the Risk unit and progress in the Tech project. J.P Morgan's price target on DNB remains at $78 with a Neutral rating. Tech project is progressing, but D&B now expects completion in H2,12. The delay is attributed to D&B's plan to rebuild part of its data supply chain in-house. Tech project costs could run $55-65MM in 2011 and $10-20MM in 2012. 2010 milestones included completion of the data center migration, a new application development center, launch of several new products, and a big lift in # of records/scores in its database. DNB closed Thursday at $85.53