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On Monday, Baird analysts adjusted their stance on IBEX Ltd. (NASDAQ: NASDAQ:IBEX), downgrading the company’s stock from Outperform to Neutral and establishing a price target of $30.00. This decision follows a significant increase in the stock’s value over the last year, which saw IBEX shares rise by 121% from a closing price of $13.81 on May 9, 2024, outperforming the S&P’s 9% gain during the same period.
The analysts noted that the current valuation of IBEX, which is trading at approximately 6 times its forecasted 2026 EBITDA, aligns closely with potential take-out valuations in the industry. This assessment comes in the wake of TASK’s recent announcement on Friday that it will be going private at a valuation of roughly 6.5 times its projected 2026 EBITDA. Historically, industry take-outs have averaged around 7.5 times the next twelve months’ EBITDA over the past 15 to 20 years. However, due to apprehensions about Generative AI (GenAI) within the industry, valuations have dipped below the norm in recent years. InvestingPro analysis shows IBEX trading at a P/E ratio of 13.6x with a notably low PEG ratio of 0.23, suggesting attractive valuation relative to growth. The company maintains a healthy financial position with a current ratio of 1.67 and operates with moderate debt levels.
Despite the downgrade, Baird analysts continue to view the growth narrative of IBEX positively. The concerns regarding GenAI impacting the industry have been subsiding, and IBEX has been successful in capturing more market share in a sector that is experiencing low single-digit growth. Although IBEX reported a revenue decline in fiscal year 2024, the company witnessed a rebound to mid-single-digit revenue growth in the first half of fiscal year 2025 and an 11% increase in the March quarter. InvestingPro data reveals strong fundamentals with a 31% gross margin and robust returns, including a 13% return on assets. Get access to the comprehensive Pro Research Report for IBEX and 1,400+ other stocks to make more informed investment decisions.
In other recent news, IBEX Ltd reported a record revenue of $140.7 million for Q3 2025, reflecting an 11% increase from the previous year. The company also achieved an adjusted earnings per share (EPS) of $0.82, surpassing analyst expectations. This robust financial performance was complemented by a raised full-year revenue guidance to between $540 and $545 million. Additionally, IBEX launched its Wave IX AI solutions to enhance customer interaction and language translation, marking a significant strategic advancement. The company’s expansion into the Indian market for a leading healthcare client further underscores its growth trajectory. Despite a 12% decline in the FinTech vertical, IBEX continues to focus on AI and digital services, which now account for 81% of its total revenue. The firm’s strong performance has instilled confidence among investors, as evidenced by the company’s announcement of a $15 million share repurchase program. These developments highlight IBEX’s continued adaptation to market demands and its strategic focus on AI solutions.
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