U.S. stock futures edge higher; earnings season continues
i3 Verticals (NASDAQ:IIIV) has been reiterated with a Buy rating and $33.00 price target by Benchmark, following the company’s strategic realignment through two major divestitures over the past nine months. According to InvestingPro data, analysts’ targets range from $25 to $35, with the stock currently trading below its Fair Value, suggesting potential upside opportunity.
The company sold its Merchant Services unit last September for $438 million in an all-cash transaction, followed by the divestiture of its Healthcare RCM business last month for $96 million in cash, according to Benchmark.
These strategic moves have transformed i3 Verticals into a company now focused exclusively on providing integrated software solutions to the Public Sector vertical, which includes Justice Tech and Public Safety, Transportation, and Education subverticals.
The firm noted that i3 Verticals now offers a combination of software with payment processing capabilities specifically tailored to these public sector markets, representing a significant shift in business focus since the company went public in 2018.
The transactions have dramatically improved i3 Verticals’ financial position, with Benchmark highlighting that the company now has a debt-free balance sheet compared to previous years when its total leverage ratio reached as high as 3.8x after funding acquisitions, providing substantial resources for potential new deals in the Public Sector space.
In other recent news, i3 Verticals announced its second-quarter earnings for fiscal year 2025, reporting an earnings per share (EPS) of $0.32, surpassing the forecast of $0.30. However, the company’s revenue fell short of expectations, coming in at $63.1 million compared to the projected $63.8 million. The company has also completed the sale of its Healthcare Revenue Cycle Management business, which had contributed approximately $39 million in revenue and $8 million in adjusted EBITDA. This move is part of i3 Verticals’ strategy to focus on public sector verticals, and the company also recently acquired a utility billing software business for $9 million. Analysts from Raymond (NSE:RYMD) James and D.A. Davidson have noted the positive impact of these strategic moves on the company’s organic growth and margin profile. i3 Verticals maintained its fiscal year 2025 revenue guidance between $207 million and $217 million, with adjusted EBITDA projected to range from $56 million to $61 million. The company also anticipates high single-digit organic revenue growth and expects a 50-100 basis points improvement in EBITDA margin. These developments reflect the company’s ongoing strategic focus on expanding its offerings and market presence in the public sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.