Tuesday, on Wall Street, Agilysys Inc (NASDAQ:AGYS) saw its price target increased by Oppenheimer from $95.00 to $100.00, while the firm maintained an Outperform rating on the stock. The adjustment comes in the wake of Agilysys delivering robust financial results for the fourth quarter of fiscal year 2024, which included a record Annual Contract Value (ACV), an uptick in subscription revenue growth, and a Free Cash Flow (FCF) margin of 47%.
The company's performance has been bolstered by the guidance provided for fiscal year 2025, with an anticipated subscription revenue growth of 27%, surpassing market expectations. This guidance indicates a promising beginning to the fiscal year. Additionally, Agilysys is poised for a significant surge in subscription revenue growth in fiscal year 2026, coinciding with the expected go-live of a partnership with Marriott.
Despite the positive outlook, there are concerns as product revenue has been on a decline, which could potentially hinder margin improvements and overall revenue growth. Nevertheless, the company's financial health appears robust, with strong growth metrics in key areas.
Oppenheimer's analysis suggests that Agilysys presents one of the most compelling narratives within the Small to Mid-Cap (SMiD) software sector, driven by its rapid growth in subscription revenues and solid profitability. The firm's success is attributed to its penetration into the relatively untapped hospitality industry.
The raised price target reflects confidence in Agilysys' continued momentum in the business, which is expected to contribute to the expansion of its multiples. The company is recognized as a solid growth compounder, with a trajectory that supports its valuation in the eyes of investors.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.