Piper Jaffray Reports Telvent Git S.A. Revenue Mix Shift Sets Positive Margin Backdrop

In a report published by Piper Jaffray, Telvent Git S.A.'s TLVT revenue mix shift sets a positive margin backdrop.

Piper Jaffray said that it makes the case for EPS upside potential of $0.35 (or ~15%) to its FY12 estimate as Telvent's business shifts toward higher margin software & service revenue, and away from lower margin system sales. “Our FY11/FY12 estimates incorporate relatively flat gross margin; we see the potential for 130bps of gross margin expansion to 37% in FY12 driven by a 10 percentage point mix shift (from 30% of FY10 revenue to 40% of FY12) toward SaaS and recurring revenue. Maintain Overweight rating and $39 price target.”

Telvent Git S.A. closed yesterday at $28.58.