David Koning, an analyst from Robert W. Baird, maintained the Hold rating on Verra Mobility (VRRM – Research Report). The associated price target is $23.00.
David Koning has given his Hold rating due to a combination of factors related to Verra Mobility’s market position and financial outlook. The balanced risk/reward profile, strong competitive moat, and expectations for continued growth in various segments of the company’s operations contribute to this rating. Koning acknowledges the company’s dominance in the cashless tolling market, noting its impressive 95% market share and the ongoing transition toward cashless tolling systems in the US. However, he remains cautious, expecting mid to high single-digit growth rather than more aggressive expansion in the near term. This is due to tougher comparisons and the need to observe how recent increases in travel will affect the business.
The Government Solutions sector also plays a role in the Hold recommendation. While there is confidence in the potential for this segment to achieve high single-digit growth, the realization of this potential is not immediate. The recurring nature of 98-99% of the revenue in this segment offers stability. Moreover, the company’s ability to maintain margins despite potential revenue reductions and the planned increase in capital expenditures for platform modernization and camera expansion further support the Hold rating. Koning also notes the company’s strategic positioning for mergers and acquisitions, with more reasonable valuation expectations on the private side, indicating a potential increase in buy-side activity from Verra Mobility.
Koning covers the Technology sector, focusing on stocks such as Accenture, Toast Inc, and Fidelity National Info. According to TipRanks, Koning has an average return of 3.8% and a 57.77% success rate on recommended stocks.
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Verra Mobility (VRRM) Company Description:
Verra Mobility Corp. engages in the provision of smart mobility technology solutions and services. It operates through the Government Solutions and Commercial Services segments. The Government Solutions segment delivers traffic law enforcement services and products to state and local governments. The Commercial Services segment offers tolling and violation management services to rental car companies, commercial fleet vehicle owners, and violation issuing authorities. The company was founded on August 15, 2016 and is headquartered in Mesa, AZ.
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