On Thursday, Needham reaffirmed its confidence in Verint Systems (NASDAQ:VRNT), maintaining a Buy rating and a price target of $40.00. Currently trading at $25.97, Verint appears undervalued according to InvestingPro analysis, which shows the company maintains a perfect Piotroski Score of 9, indicating strong financial health.
The endorsement comes after Verint reported third-quarter results that aligned with revenue expectations, once accounting for a $14 million unbundled Software (ETR:SOWGn) as a Service (SaaS) renewal initially anticipated in the fourth quarter but recognized in the third.
Verint's recent earnings call revealed an adjustment to the fourth-quarter unbundled SaaS estimate, reduced by the discussed $14 million. Despite this shift, the overall market conditions have not significantly changed. The firm's stance is influenced by a perception that the market has overly negative expectations for Verint's business trajectory following the second-quarter earnings, which were affected by broader Contact Center as a Service (CCaaS) market challenges.
During the earnings call, management noted a decrease in seat counts upon contract renewals. However, Needham highlighted a potential upside from Verint's Artificial Intelligence (AI) Bots, which could represent an opportunity approximately six times greater, or $1,200 per year, for each agent role impacted by AI. This is compared to the current average revenue of $200 per year per agent, suggesting an increase in Verint's total addressable market (TAM).
Needham's analysis suggests that despite the headwinds faced in the Contact Center as a Service sector, Verint's strategic offerings, particularly in AI, could significantly enhance their market position and revenue potential.
With a solid gross profit margin of 71.4% and strong financial health metrics according to InvestingPro, this prospect underpins the firm's decision to reiterate its Buy rating and $40 price target for Verint Systems. For deeper insights into Verint's valuation and growth potential, including 8 additional ProTips and comprehensive financial analysis, investors can access the full Pro Research Report available on InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.