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On Wednesday, Oppenheimer analysts adjusted their outlook on Agilysys Inc (NASDAQ:AGYS), reducing the price target on the company's stock to $135 from the previous $150. Despite the downward revision, they continued to endorse the stock with an Outperform rating. According to InvestingPro data, the company maintains a "GOOD" financial health score, with 4 analysts recently revising their earnings expectations upward for the upcoming period.
The reassessment came after Agilysys reported fiscal third-quarter results and full-year 2025 guidance that fell short of Wall Street's forecasts. The underperformance was attributed to longer sales cycles in the Point of Sale (POS) segment and insufficient resources in Services.
The analysts observed that, while the POS and Services segments faced challenges, Agilysys's subscription business was a bright spot, exceeding expectations in the third quarter. The company also received positive feedback on its bookings, attach rates, and sales pipeline momentum. This success is reflected in the company's robust 17% revenue growth and impressive 62.5% gross profit margin over the last twelve months. Another encouraging development was the progress of the Marriott deployment, which has now advanced to the testing phase.
Agilysys shares experienced a 20% decline in after-hours trading, with concerns that the stock could stagnate in the near term. This sentiment was driven by a combination of the disappointing guidance and a perceived loss of management credibility. Despite these setbacks, Oppenheimer analysts suggest that investors consider purchasing shares amidst the current weakness. They point to the robust growth of the high-margin subscription revenue, which is anticipated to potentially exceed 50% in the second half of fiscal year 2026, as the Marriott project becomes operational.
The report concluded with a revised price target of $135, reflecting both the immediate concerns and the long-term potential seen in Agilysys's subscription revenue growth. While the stock has delivered a remarkable 45% return over the past year, InvestingPro analysis suggests the stock is currently trading above its Fair Value.
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