Zacks Investment Research downgraded shares of Lender Processing Services Inc. (LPS) from OUTPERFORM to NEUTRAL on November 07, 2012, with a target price of $26.00.
We believe that Lender Processing's technology-driven end-to-end solutions for the mortgage and real estate industries as well as contract renewals will aid in generating modest business growth and positions it to capitalize on market recovery. Reduction of risk profile by exiting its unprofitable non-core business lines and restructuring of balance sheet are some key positives for the stock. Management is also optimistic on the long-term origination market which is still not fully tapped. However, lower-than-expected revenue in the third quarter, a conservative guidance for the fourth quarter, continued underperformance in Default Services, and last but not the least macroeconomic uncertainty refrain us from being too optimistic on the stock. Hence, we downgrade the recommendation from Outperform to Neutral.
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