Shares of NCR Corp. rose on Tuesday after a Robert W. Baird analyst upgraded the maker of automatic teller machines, foreseeing higher spending from banks on ATMs.
Reik Read lifted NCR to "Outperform" from "Neutral" and raised his price target to $31 from $26. The new target implies a 20 percent from Monday's close of $25.80.
Read said Baird's survey of bank ATM managers showed a "positive North American ATM environment," while NCR management told him the company continues to receive orders for machines from larger customers.
Bank officials told Baird that ATM upgrade and replacement rates are higher in the second quarter than the historical average, and are higher than levels seen in the last two quarter, he said.
"NCR has had traction with JP Morgan, Wells Fargo and Bank of America with deposit automation rollouts," he wrote in a client note. "We see incremental traction with Citigroup, which we understand will be upgrading a significant portion of its approximately 2,200 ATMs over the next few years."
In addition, NCR appears to be doing brisk ATM business overseas, particularly in China, and said it continues to win contracts with larger nonbank customers, he wrote.
On Monday, NCR said it won a three-year, multimillion-dollar contract with the U.S. Postal Service to provide retail point-of-service hardware for thousands of its postal counters. Specific financial terms were not disclosed.
Shares of the Dayton, Ohio, company rose $1.26, or 4.9 percent, to $27.06.
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