Wedbush initiates NCR Atleos stock with outperform rating on cash flow

Wedbush initiated coverage of NCR Atleos (NATL) with an outperform rating and a $35 price target, citing strong free cash flow generation and its position as a leading ATM operator. This positive outlook is supported by NCR Atleos' Q1 2025 results, which showed a 56% year-over-year increase in EPS to $0.64, and DA Davidson's reiterated Buy rating with a $60 price target, reflecting optimism about self-service banking and ATM-as-a-Service offerings, despite a slight revenue decrease on a constant currency basis.

Analysis

Wedbush initiated coverage on NCR Atleos Corp. (NATL) with an "outperform" rating and a $35.00 price target, citing the company's strong free cash flow generation—$227 million in levered FCF over the last twelve months—and its position as a leading global ATM operator. This positive outlook is supported by potential tailwinds such as leveraging its industry-leading ATM installed base to increase services per customer, gain wallet share, and current debt reduction initiatives. NCR Atleos reported a 56% year-over-year increase in Q1 2025 earnings per share to $0.64, although revenue of $966 million was slightly down year-over-year on a constant currency basis; however, the company reaffirmed its full-year 2025 guidance for 3-6% core revenue growth and 7-10% adjusted EBITDA growth. Further reinforcing positive sentiment, DA Davidson reiterated its "Buy" rating with a $60.00 price target, expressing optimism about demand trends in self-service banking, ATM-as-a-Service offerings, and noting potential for capital return as debt declines. InvestingPro data suggests NATL may be undervalued, with analyst price targets ranging from $30 to $60, reflecting a generally positive view on its operational performance and strategic direction.

Key Decisions for Investors

• Given the new 'outperform' rating from Wedbush, a reiterated 'Buy' from DA Davidson, strong free cash flow of $227 million LTM, and a 56% YoY EPS increase in Q1, investors may find NCR Atleos an attractive opportunity, especially considering its current valuation appears favorable with analyst price targets ranging from $30 to $60.
• Key factors to monitor include NATL's ability to expand services through its leading ATM installed base, successfully execute its debt reduction strategy, and the potential for future capital return programs, which are central to the positive analyst outlooks.
• While the reaffirmed full-year guidance for 3-6% core revenue growth and 7-10% adjusted EBITDA growth is encouraging, investors should track the company's progress in achieving these targets, particularly in light of the slight Q1 revenue dip on a constant currency basis.