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On Wednesday, Oppenheimer adjusted its outlook on Agilysys Inc (NASDAQ:AGYS), a leading provider of hospitality software solutions, by reducing the price target on the company's shares. The new price target has been set at $90.00, down from the previous target of $135.00. Despite the decrease, the firm has chosen to maintain an Outperform rating on Agilysys stock, which currently trades at $65.76, down over 50% year-to-date. According to InvestingPro data, analyst consensus remains strongly bullish, with targets ranging from $100 to $178.
The revision in the price target by Oppenheimer comes after considering several factors that could impact the company's financial performance. The analyst noted improvements in Agilysys's execution in the fourth fiscal quarter of 2025 but warned of potential downside risks in the revenue guidance for fiscal year 2026. The adjustment takes into account a delay in expected contributions from Marriott until fiscal year 2027 and weaker year-to-date travel and consumer spending data. With a market capitalization of $1.8 billion and revenue growth of 15.5% in the last twelve months, InvestingPro analysis reveals the company maintains a "GOOD" overall financial health score.
The firm remains positive on certain aspects of Agilysys's business. Recent checks have indicated signs of resolution to issues within the Services and Point of Sale (POS) segments. However, concerns persist among investors regarding the broader travel industry's influence on Agilysys and the structural health of its POS business.
In light of these concerns, the analyst from Oppenheimer highlighted potential positive factors that may aid in improving the execution of Agilysys's POS business. These include the hiring of new sales leadership from Toast (NYSE:TOST), the progression past a technology transition, and the prospect of easier year-over-year comparisons in fiscal year 2026.
The revised price target of $90 reflects a recalibration based on the compression of group multiples, according to Oppenheimer. This adjustment takes into account the current market conditions and the challenges faced by Agilysys, while still recognizing the company's potential for outperformance in the market.
In other recent news, Agilysys Inc. reported its financial results for the third quarter of fiscal year 2025, surpassing earnings per share (EPS) expectations but missing revenue forecasts. The company posted an EPS of $0.38, exceeding the forecast of $0.34, while revenue reached $69.6 million, below the anticipated $73.15 million. Despite the earnings beat, Agilysys revised its full-year revenue guidance downward to $273 million, reflecting ongoing challenges in its Point of Sale (POS) segment and delays in project implementations. Analysts from Oppenheimer and Needham lowered their price targets for Agilysys, with Oppenheimer setting a new target of $135 and Needham adjusting to $125, though both firms maintained a positive outlook on the company's subscription revenue growth. Subscription revenue, a bright spot for Agilysys, showed a significant year-over-year increase of 45.1%, with expectations of continued growth as the Marriott project progresses. Craig-Hallum also adjusted its price target for Agilysys to $120, retaining a Buy rating and expressing confidence in the company's market position and strategic initiatives. The anticipated collaboration with Marriott is seen as a significant milestone that could reinforce Agilysys's market position and contribute to its revenue growth. Despite the setbacks, analysts suggest that investors consider purchasing shares amidst the current weakness, citing the robust growth of the high-margin subscription revenue.
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