DST Systems Inc. (DST) reported good second quarter results, with earnings per share (EPS) exceeding our expectations. The company has supplemented internal growth with strategic acquisitions.
We remain encouraged with the quarter’s revenue outperformance and solid cost structure. We believe that DST Systems leadership and scale in Financial Services will attract new customers based on the increasing popularity of mutual funds.
Moreover, the company is winning new customers at regular intervals. However, competition from Lombardi, Savvion and TIBCO Software may pose some challenges. We thereby upgrade our rating to Outperform on DST.