Wednesday saw ACI Worldwide (NASDAQ:ACIW) receive a vote of confidence from DA Davidson as the firm raised its price target on the company's shares to $42.00, up from the previous $36.00, while reiterating a Buy rating. The adjustment follows ACI's first-quarter earnings report, which delivered revenue figures slightly above expectations and adjusted EBITDA that was nearly double the forecast, thanks in part to a higher proportion of Software License fees.
The company's management has responded to the strong quarter by revising its financial outlook for 2024 upwards. The updated guidance sees a 0.2% increase in the midpoint for revenue and a 0.6% rise for adjusted EBITDA. This optimistic adjustment reflects the company's performance and expectations for the remainder of the year.
In light of the recent financial results and updated guidance from ACI Worldwide, DA Davidson has fine-tuned its own forecasts for the company. While the firm notes that these annual forecast changes are modest, the positive earnings report and guidance update have been significant enough to warrant maintaining a Buy rating on ACI's stock.
The analyst from DA Davidson highlighted the company's first-quarter achievements, stating, "ACI reported 1Q results with revenue a bit above our forecasts, but adjusted EBITDA almost double our forecast (aided by a higher mix to Software License fees)." This strong performance has led to a more favorable outlook for the year, prompting the firm to adjust its price target accordingly.
InvestingPro Insights
In conjunction with the DA Davidson's updated outlook on ACI Worldwide, InvestingPro metrics provide a more granular view of the company's financial health. ACI Worldwide's market capitalization stands at $3.63 billion, underscoring its substantial presence in the industry. The company's Price to Earnings (P/E) ratio is currently at 25.25, which adjusts to a slightly more attractive 22.18 when considering the last twelve months as of Q1 2024. This is particularly noteworthy as ACI Worldwide is trading at a low P/E ratio relative to near-term earnings growth, as indicated by a PEG ratio of 0.4 during the same period.
InvestingPro Tips also reveal that ACI Worldwide is trading near its 52-week high, with the price at 93.86% of this peak. This aligns with the positive momentum noted by analysts, as the company's stock has seen a significant 68.48% price uptick over the last six months. Additionally, the company's profitability is not only predicted by analysts for this year but has been demonstrated over the last twelve months, further validating the optimistic sentiment surrounding ACI Worldwide.
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