Bullish Tech Stock to Watch: Amdocs Limited (NASDAQ: DOX)

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Amdocs Limited (NASDAQ: DOX) stock rose over 5.1% on 11th November, 2020 (as of 10:14 am GMT-5; Source: Google finance) as the company posted better than expected results for the fourth quarter of FY 20. The twelve-month backlog, which includes expected revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was $3.62 billion at the end of the fourth quarter of fiscal 2020, up $140 million from the end of the prior quarter and up 3.7% as compared to last year’s fourth fiscal quarter. The company had closed the acquisition of Openet on August 11, 2020. Further, the company has signed an agreement for the divestiture of OpenMarket, an Amdocs subsidiary, for approximately $300 million cash with Infobip, a company in which One Equity Partners is the primary institutional investor.

DOX in the fourth quarter of FY 20 has reported the adjusted earnings per share of $1.23, beating the analysts’ estimates for the adjusted earnings per share of $1.19, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 2.2 percent to $1.05 billion in the fourth quarter of FY 20, beating the analysts’ estimates for revenue by 1.79%.

For the first quarter of 2021, the company expects revenue to be in the range of approximately $1,055-$1,095 million. The company expects Non-GAAP diluted EPS to be in the range of approximately $1.09-$1.15

For fiscal 2021, the company expects revenue growth to be in the range of 4.0%-8.0% year-over-year as reported and revenue growth to be in the range of 3.5%-7.5% year-over-year on a constant currency basis. The full year fiscal 2021 revenue guidance includes about 1.5% of growth from the acquisition of Openet, and an expected positive impact from foreign currency fluctuations of about 0.5% year-over-year and Non-GAAP diluted earnings per share growth to be in the range of roughly 5.0%-9.0% year-over-year. The impact of the acquisition of Openet on Amdocs’ non-GAAP diluted earnings per share is expected to be neutral in fiscal year 2021, and accretive thereafter. The company expects to generate the free cash flow of approximately $470 million, comprised of cash flow from operations, less net capital expenditures and other. The company expects to generate the normalized free cash flow of approximately $620 million in fiscal 2021. The normalized free cash flow excludes capital expenditure of up to $150 million related to the new campus development in Israel, and other items. The divestiture of OpenMarket is projected to close within the next few months.

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