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On Wednesday, Needham analysts adjusted their outlook on Agilysys Inc (NASDAQ:AGYS), reducing the price target from $145.00 to $125.00, while continuing to endorse the stock with a Buy rating. The revision follows Agilysys' third-quarter fiscal year 2025 results, which fell short of expectations across all revenue segments. The company experienced challenges with point-of-sale (POS) sales and faced delays in project implementations towards the end of the quarter.
Despite these setbacks, Agilysys managed to report better-than-anticipated earnings before interest, taxes, depreciation, and amortization (EBITDA), thanks to cost efficiencies realized from the lower revenue base. Although the company has revised its fiscal year 2025 outlook downward due to the mentioned revenue obstacles, the forecast for subscription revenue growth remains unchanged at an optimistic 38% year-over-year increase.
Needham's analysts expressed continued confidence in Agilysys' margin improvement and the trajectory of subscription revenue. They noted that the shares had dropped significantly, by more than 20%, in after-hours trading. In light of this decline, analysts recommended purchasing the stock during this period of weakness.
The new price target of $125 reflects the near-term revenue challenges, yet Needham reaffirms its positive stance on Agilysys with a Buy rating.
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