William Blair initiated research coverage of CSG Systems International, Inc. (CSGS $55.18), a revenue and customer management, customer engagement, and monetization solution provider that enables clients to monetize relationships with the end-customer.
Analysts Maggie Nolan and Matt Stotler estimated the company would generate revenue of $1.03 billion in 2021, $1.08 billion in 2022, and $1.14 billion in 2023. CSG’s base goal for 2025 is to reach $1.5 billion in revenue, with a stretch goal of $2 billion.
“We believe that CSG is poised to accelerate growth,” Nolan said, “given recent contract renewals and expansions with large communication clients, expansion into faster growing addressable markets, and a rebound in the payments business. Longer term, we believe that CSG can capture share in the European telecom market where the company is underpenetrated. Collectively, these growth opportunities create an interesting inflection point for CSG and position the company to accelerate organic revenue growth from the low single digits to the midsingle digits. We also expect management to supplement faster organic growth with a higher level of M&A activity, driving a significant acceleration in overall revenue growth.”
Stotler said, “Recently signed long-term contracts with CSG’s three largest customers provide important visibility through 2024 for accounts that represent more than 40% of revenue. While we expect cable and broadband revenue to grow, CSG’s expansion into customer engagement and cloud payment solutions enable the company to diversify its revenue base beyond the communications industry and represent a meaningful long-term runway for growth.”
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William Blair or an affiliate received compensation for investment banking services or non-investment-banking services from CSG Systems International, Inc. within the last 12 months. CSG Systems International, Inc. is or was, within the last 12 months, an investment banking client of William Blair and/or one or more of its affiliates.
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Current Ratings Distribution (as of 12/12/21)
Outperform (Buy): 77%
Market Perform (Hold): 23%
Underperform (Sell): 1%
Inv. Banking Relationships*
Outperform (Buy): 33%
Market Perform (Hold): 11%
Underperform (Sell): 0%
* Percentage of companies in each rating category that are investment banking clients, defined as companies for which William Blair has received compensation for investment banking services within the past 12 months.
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