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Investing.com - Stifel lowered its price target on Amdocs Ltd. (NASDAQ:DOX) to $97 from $100 while maintaining a Buy rating on the stock. According to InvestingPro data, Amdocs currently trades at a P/E ratio of 17.27, with analysts setting targets between $100-111.
The price target reduction follows what Stifel described as a "decidedly mixed" earnings report from the software and services provider, with revenue, earnings per share, and free cash flow exceeding consensus estimates, while margins came in lighter than expected. Despite these mixed results, InvestingPro data shows Amdocs maintains a "Good" overall financial health score and has consistently raised its dividend for 13 consecutive years.
Stifel cited Amdocs’ fiscal year 2026 outlook as a key factor in the downgrade, noting that operating profit margin, earnings per share, and free cash flow guidance ranges were lower than anticipated.
The company attributed most of the slower margin improvement to incremental investments in artificial intelligence, according to Stifel’s analysis.
The revised price target reflects a discount to Amdocs’ 5-year average valuations for enterprise value to EBITDA, price-to-earnings ratio, and free cash flow yield, which Stifel justified by pointing to continued weak organic growth, an incremental investment phase, and declining revenue from a top client.
In other recent news, Amdocs Limited reported its fourth-quarter fiscal 2025 earnings, surpassing analyst expectations. The company announced adjusted earnings per share of $1.83, slightly above the consensus estimate of $1.82. Revenue for the quarter was $1.15 billion, marginally exceeding the projected $1.14 billion. Despite a 9.0% year-over-year decline in reported revenue due to phasing out low-margin, non-core activities, revenue increased by 2.8% on a pro forma constant currency basis compared to the previous year. Additionally, Amdocs declared an 8% increase in its quarterly dividend as part of its transition towards higher-margin business operations. These developments reflect Amdocs’ strategic adjustments and financial performance.
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