Short Report on Broadridge Lacks Merit in our View

On Tuesday, Spruce Point Capital Management published a short report taking a multi-pronged approach to suggest that Broadridge is highly overvalued and should trade 65%-75% lower than the current stock price. The stock fell on the open and finished the trading day down 0.31% versus a 2.11% increase to the Morningstar U.S. Equity Market index. Though the report highlights a few concerns we believe are valid, such as the high amount of expense capitalization and purchase price of Itiviti, we believe that the thrust of Spruce Point Capital's thesis lacks merit. We will maintain our fair value estimate of $185 on Broadridge's shares and narrow moat rating. We regard Broadridge's shares as about 20% undervalued. That said, with the current market downturn, we believe there are many other stocks that offer a more favorable risk-reward profile.