Shares of Diebold Nixdorf Inc. (NYSE:DBD) were up 10.5% as of 3:30 p.m. EDT Thursday, after the ATM services specialist received a notable analyst upgrade.
More specifically, J.P. Morgan analyst Paul Coster upgraded Diebold from "neutral" to "overweight," but also simultaneously reduced his per-share price target on the stock to $24 from $29. Diebold closed today at $17.85 per share.
In a note to clients, Coster cited Diebold's attractive valuation to justify his bullishness. He also elaborated that its fundamentals are "weak but stable," and he still anticipates the company is poised to benefit from an impending ATM upgrade cycle.
To be sure, even after today's pop, the stock is down nearly 30% year to date -- the consequence of a sharp decline since Diebold reduced its full-year revenue and earnings outlook in July. At the time, management blamed longer customer decision-making processes and order-to-revenue conversion cycles for some of the larger, more complex products within its banking business. But Diebold also insisted that those purchasing decisions were delayed, not canceled, which supports Coster's assertion that the stock's longer-term thesis remains intact.
In the meantime, Diebold has focused on accelerating cost reductions under its multiyear cost-savings initiative, which should help the company emerge stronger and leaner when the ATM upgrade cycle finally arrives. With shares still trading near multiyear lows, I think Coster's call could prove to be a great one for patient investors willing to buy now.