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SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) maintained its Market Perform rating by analysts at Raymond (NSE:RYMD) James following the company’s third fiscal quarter of 2025 results. The financial technology company’s latest earnings report featured what the analysts recognized as disappointing total revenue growth, despite acknowledging that the quality of growth was better. This comes after a period of speculation regarding the company’s guidance, which was finally reduced for the fiscal year 2025.
On Thursday, the company announced a new $200 million share repurchase authorization alongside its earnings results. However, during the earnings call, the management indicated a shift in capital allocation strategy, favoring mergers and acquisitions (M&A) over share buybacks for the fiscal year 2026. The Raymond James analysts expressed concern over this decision, noting that SS&C’s current valuation near book value and its double-digit free cash flow yield set a high bar for the return on investment (ROI) from M&A compared to share repurchases.
The analysts elaborated on their hesitation, suggesting that the anticipated focus on M&A could potentially lower return metrics in the near term. Despite finding the company’s valuation levels intriguing, they found it challenging to argue for an improvement in valuation multiples, given what they perceive as a suboptimal capital allocation strategy at present.
SS&C Technologies, a provider of software and software-enabled services for the financial services and healthcare industries, has faced scrutiny over its financial guidance after two consecutive quarters of lackluster performance earlier in the fiscal year. The revised guidance and the recent announcement regarding the company’s strategic focus on M&A have been key points of discussion among investors and analysts alike.
In other recent news, SS&C Technologies Holdings Inc. reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $1.44 compared to the forecasted $1.41. However, the company’s revenue slightly missed projections, coming in at $1.51 billion against an anticipated $1.52 billion. Despite the revenue shortfall, SS&C’s adjusted EBITDA margin improved to 39.1%. Following these earnings, DA Davidson adjusted SS&C’s stock price target to $94 from $100, maintaining a Buy rating, reflecting a cautious optimism about the company’s future. Similarly, Needham analysts lowered their price target to $90 from $105 but also kept a Buy rating, citing SS&C’s strong performance and potential for growth in the latter half of the year. On the other hand, JPMorgan downgraded SS&C’s stock from Overweight to Neutral, reducing the price target to $86, due to concerns about the company’s ability to achieve its growth targets amid increased competition. These developments highlight the mixed sentiment among analysts regarding SS&C’s financial performance and growth prospects.
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