Citi Comments on Tech Data's Strong Quarterly Results

Tech Data Corp. TECD revenues of $6.2B and EPS of $1.07 were 6% and 15% above Citi's estimates, primarily due to solid European demand and favorable currency. Citi is revising up its earnings estimates by 5-7% for FY12-13 based on a more optimistic demand outlook and updated currency assumptions. While the shares have rebounded sharply (+31%) since bottoming in early July, Citi believes TECD remains attractively valued at 1.1x tangible book, 9-10x F12 revised EPS, and 4.3x EV/EBITDA. Mgt is guiding for sales to be above seasonal in 4FQ, primarily due to strong demand trends in the US. Assuming a relatively stable Euro, this implies a low double-digit revenue growth which is well above the current street estimate of 3-4%. Citi reiterates a Buy with a new 12-month target of $60. TECD closed Monday at $46.24