AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

<p>Back in August 20, 2019, we highlighted in an insight "<em><strong>SpinTalk -Valuation Update On Our Favorite Fallen Spins: Perspecta, Newmark &amp; Spirit Realty Capital" </strong></em>where we stated the reasons we expected their valuation gaps relative to peers to close. Since then, Perspecta shares have appreciated by ~13% , Spirit Realty Capital by 11% with Newmark Group winning the prize with a 40% share price increase. Over this period, the S&amp;P 500 Index has risen by ~7%.</p><p>Below we provide valuation updates on the three stocks. While it may be wise to take some profit out of Newmark which has seen its valuation gap closed for the most part, we still see more material upside in the other two stocks with catalysts still in play.</p>

Back in August 20, 2019, we highlighted in an insight "SpinTalk -Valuation Update On Our Favorite Fallen Spins: Perspecta, Newmark &amp; Spirit Realty Capital" where we stated the reasons we expected their valuation gaps relative to peers to close. Since then, Perspecta shares have appreciated by ~13% , Spirit Realty Capital by 11% with Newmark Group winning the prize with a 40% share price increase. Over this period, the S&amp;P 500 Index has risen by ~7%.Below we provide valuation updates on the three stocks. While it may be wise to take some profit out of Newmark which has seen its valuation gap closed for the most part, we still see more material upside in the other two stocks with catalysts still in play.

SpinTalk -Update On Our Favorite Now Not So Fallen Spins: Perspecta, Spirit Realty Capital, Newmark

<p>Following the latest round of quarterly earnings, we provide valuation updates on fallen spins which we believe remain  misunderstood by the market or have yet to fully close their valuation gaps. Below we focus on 3 companies on which we have covered in previous insights - Perspecta (PRSP US), Newmark (NMRK US) and Spirit Realty Capital (SRC US).</p><h2><strong>                                                                   Fallen Spins</strong></h2><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/096/356/original/FS1.jpg?1566302886" class="editor-image img-responsive" data-smartkarma-image-id="96356"></figure><p><strong><em> Source: AlphaSituations</em></strong></p>

Following the latest round of quarterly earnings, we provide valuation updates on fallen spins which we believe remain  misunderstood by the market or have yet to fully close their valuation gaps. Below we focus on 3 companies on which we have covered in previous insights - Perspecta (PRSP US), Newmark (NMRK US) and Spirit Realty Capital (SRC US).                                                                   Fallen Spins Source: AlphaSituations

SpinTalk -Valuation Update On Our Favorite Fallen Spins: Perspecta, Newmark & Spirit Realty Capital

<div>It’s been a little more than 13 months since Perspecta (PRSP US) emerged  from a Reverse Morris Trust transaction combining the US Public Sector business of DXC Technology (DXC) with two affiliated companies-<em>Vencore Holding and KeyPoint Government Solutions</em>-of technology focused private equity firm Veritas Capital. Since then, the performance of PRSP shares has been no better than flat while most of its peers in the Government IT services sector have experienced valuation appreciation of 25% amid a favorable operating environment. </div><div></div><div>The overarching concern for Perspecta is the uncertainty over its ability to hold onto the largest contract in its portfolio, namely its contract with the US Navy and Marine Corps  to manage its intranet under the latter’s Next Generation Enterprise Network (NGEN) program, which is up for re-tender. The current contract is estimated to contribute upwards of 15% to Perspecta's revenues and EBITDA. We think these concerns over the re-tender from the Perspecta perspective are way overblown with Perspecta well positioned to at least share the spoils of the new contract for which awards are scheduled to be made later this year. In any event, our analysis indicates that Perspecta shares already fully discount the potential loss of this contract making it an attractive value proposition. </div><div></div><div>Based on the latest management guidance numbers, we arrive at a target share price range of $39-$48, at least 65% above the prevailing share price. Excluding the NGEN contract from the Perspecta earnings, we arrive at a target share price range of $29-$37, which is still at least &gt;20% above the prevailing Perspecta share price.</div>

It’s been a little more than 13 months since Perspecta (PRSP US) emerged  from a Reverse Morris Trust transaction combining the US Public Sector business of DXC Technology (DXC) with two affiliated companies-Vencore Holding and KeyPoint Government Solutions-of technology focused private equity firm Veritas Capital. Since then, the performance of PRSP shares has been no better than flat while most of its peers in the Government IT services sector have experienced valuation appreciation of 25% amid a favorable operating environment. The overarching concern for Perspecta is the uncertainty over its ability to hold onto the largest contract in its portfolio, namely its contract with the US Navy and Marine Corps  to manage its intranet under the latter’s Next Generation Enterprise Network (NGEN) program, which is up for re-tender. The current contract is estimated to contribute upwards of 15% to Perspecta's revenues and EBITDA. We think these concerns over the re-tender from the Perspecta perspective are way overblown with Perspecta well positioned to at least share the spoils of the new contract for which awards are scheduled to be made later this year. In any event, our analysis indicates that Perspecta shares already fully discount the potential loss of this contract making it an attractive value proposition. Based on the latest management guidance numbers, we arrive at a target share price range of $39-$48, at least 65% above the prevailing share price. Excluding the NGEN contract from the Perspecta earnings, we arrive at a target share price range of $29-$37, which is still at least &gt;20% above the prevailing Perspecta share price.

SpinTalk:Perspecta (PRSP US)- A Compelling Value Proposition

United States

Perspecta Inc. provides information technology services.

Perspecta Inc (PRSP US)

SpinTalk -Update On Our Favorite Now Not So Fallen Spins: Perspecta, Spirit Realty Capital, Newmark

Back in August 20, 2019, we highlighted in an insight "SpinTalk -Valuation Update On Our Favorite Fallen Spins: Perspecta, Newmark & Spirit...

Robert Sassoon

SpinTalk -Valuation Update On Our Favorite Fallen Spins: Perspecta, Newmark & Spirit Realty Capital

Following the latest round of quarterly earnings, we provide valuation updates on fallen spins which we believe remain misunderstood by the market...

Robert Sassoon

SpinTalk:Perspecta (PRSP US)- A Compelling Value Proposition

It’s been a little more than 13 months since Perspecta (PRSP US) emerged from a Reverse Morris Trust transaction combining the US Public Sector...

Robert Sassoon