Morgan Stanley Upgrades CDK Global (CDK) to Equalweight

Morgan Stanley upgraded CDK Global (NASDAQ: CDK) from Underweight to Equalweight with a price target of $70.00 (from $56.00).

Analyst Brian Essex says his upgrade was done to "reflect progress toward better profitability and a better than expected shareholder return profile going forward." That profile is based on the company's efforts to execute better in a competitive environment.

To wit: "CDK reported another quarter of margin expansion and better revenue per site in spite of significant transformation of its operating structure, sales organization, and product suite. The company continues to face a challenging competitive environment as Reynolds & Reynolds' share loss abates, Cox Automotive continues to invest in its platform, and smaller competitors remain aggressive at the lower-end of the market. Competitive dynamics are reflected in a decline in North American Automotive sites (-26 y/y and -48 q/q). Offsetting this was an increase in revenue per site which implies a higher attach rate as well as the loss of smaller (likely lower margin) customers. CDK also removed some overhang by re-signing a significant contract with General Motors, the company's largest customer."

For an analyst ratings summary and ratings history on CDK Global click here. For more ratings news on CDK Global click here.

Shares of CDK Global closed at $64.01 yesterday.

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