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On Thursday, DA Davidson confirmed its Neutral stance on Tyler Technologies (NYSE:TYL) shares, maintaining a price target of $595.00. Currently trading at $618.08, near its 52-week high of $661.31, the stock appears to be trading above InvestingPro’s Fair Value estimate. The decision follows a recent review of the company’s fourth-quarter performance, where an error in revenue forecasting was identified and corrected. Analyst Peter Heckmann had previously overestimated the revenue from a contract with the state of Texas, which was lost by Tyler Technologies.
Heckmann originally believed the Texas contract brought in $83 million in revenue for 2024, but the actual figure was $44 million, including $39 million in pass-through payment processing fees. This miscalculation led to an adjustment in the revenue forecasts for 2025 and 2026. Despite the correction, the analyst noted that there is little change in the earnings forecasts for Tyler Technologies, which maintains strong financials with $2.14 billion in revenue and a GOOD overall financial health score according to InvestingPro’s comprehensive analysis.
In his statement, Heckmann said, "Following the 4Q update, we lowered our 2025 and 2026 revenue forecasts to reflect the loss of a relatively large contract with the state of Texas." He acknowledged the initial misunderstanding of the management’s comments regarding the contract’s financial impact.
The correction in the financial model was necessary to accurately reflect the company’s revenue stream without the Texas contract. The DA Davidson analyst emphasized that the revised figures have not significantly altered the expected earnings, thereby not affecting the Neutral rating or the price target for the stock.
Tyler Technologies, a provider of integrated software and technology services to the public sector, has not seen a change in its stock rating or price target as a result of this update. The company’s shares continue to be evaluated with a price target that reflects the current understanding of its financial position and market prospects.
In other recent news, Tyler Technologies has announced changes to its executive team. Bret Dixon, President of Tyler’s State & Federal Group, will retire in June 2025, and Rusty Smith will assume his role while continuing as President of the Justice Group. In financial developments, Tyler Technologies reported strong fourth-quarter results, with Subscription revenue surpassing estimates by $4 million. For fiscal year 2025, the company’s guidance indicates a positive margin trajectory, despite a $15 million revenue headwind from an expiring contract in Texas.
Analysts have responded to these developments with several adjustments to their price targets for Tyler Technologies. Needham increased its price target to $750, maintaining a Buy rating, citing strong profitability and cash generation prospects. Truist also maintained a Buy rating with a $775 price target, highlighting the company’s successful commoditized payments deals and SaaS revenue growth projections. DA Davidson raised its price target to $595, maintaining a Neutral stance, noting a slight dip in revenue projections but a more optimistic EPS guidance for fiscal 2025.
Furthermore, Oppenheimer raised its price target to $725, maintaining an Outperform rating, emphasizing the company’s strong demand outlook and execution on top-and bottom-line initiatives. The company’s strategic acquisition of MyGov and the formation of a new State Go-To-Market team are also noted as contributing factors to the positive outlook from analysts. These recent developments reflect Tyler Technologies’ ongoing efforts to strengthen its market position and financial performance.
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