Amdocs stock price target lowered to $97 by BofA on slower growth

Investing.com - BofA Securities has lowered its price target on Amdocs Ltd. (NASDAQ:DOX) to $97.00 from $100.00 while maintaining a Buy rating on the stock. This target remains below InvestingPro’s Fair Value estimate, suggesting the stock may still be undervalued despite trading at $83.96 currently.

The adjustment follows Amdocs reporting pro-forma revenue growth of 2.8% year-over-year and earnings per share of $1.83, slightly above the Street’s expectation of $1.82. The company’s operating margin reached 21.6%, up 290 basis points year-over-year, driven by the phase-out of non-core businesses and operating efficiencies. While quarterly results were positive, InvestingPro data shows trailing twelve-month revenue declined 6.76% to $4.65 billion.

BofA highlighted several positive factors, including Amdocs’ backlog providing 90% visibility into fiscal year 2026 revenues, its cloud business continuing to deliver double-digit growth and now representing 30% of revenue, and generative AI introducing significant growth opportunities. InvestingPro data reveals additional strengths, with management aggressively buying back shares and the company maintaining dividend payments for 14 consecutive years, with 10.02% dividend growth in the last twelve months.

Despite these strengths, BofA noted that growth remains constrained, with fiscal year 2026 guidance for revenue growth at 3.7% and EPS at $7.44, below Street expectations of 4.1% and $7.66, respectively. The firm expects the year to start slowly before ramping up in the second half.

The new price target is based on a 12x fiscal year 2027 estimated price-to-earnings ratio, compared to the previous 13x fiscal year 2026 estimate.

In other recent news, Amdocs Limited reported its fourth-quarter fiscal 2025 earnings, which slightly exceeded analyst expectations. The company announced adjusted earnings per share of $1.83, just above the consensus estimate of $1.82. Revenue was reported at $1.15 billion, slightly surpassing the $1.14 billion estimate, although it reflected a 9% year-over-year decline due to the strategic phase-out of certain low-margin, non-core business activities. Amdocs also announced an 8% increase in its quarterly dividend as it shifts toward higher-margin business areas.

In related developments, Stifel adjusted its price target for Amdocs to $97 from $100, maintaining a Buy rating. This adjustment followed what was described as a "decidedly mixed" earnings report, where revenue, earnings per share, and free cash flow exceeded consensus estimates, but margins were lighter than expected. Stifel’s analysis noted the company’s investments in artificial intelligence as a factor influencing the price target revision. These recent developments highlight the evolving financial landscape for Amdocs.

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