Verint stock poised for gains as AI bookings surge - TD Cowen

On Thursday, TD Cowen adjusted its price target for Verint Systems (NASDAQ:VRNT) stock, a company specializing in analytics and customer engagement solutions. The new price target is set at $36.00, a decrease from the previous $40.00, while the firm maintains a Buy rating.

The adjustment follows Verint Systems' second-quarter fiscal year 2025 earnings, which did not meet consensus expectations. The company has experienced a slowdown in bundled Software as a Service (SaaS) growth, which is up by 15% year-over-year, attributed to customers' flexibility in choosing hosting options.

Despite the earnings shortfall, TD Cowen remains optimistic about Verint's potential, particularly in the area of artificial intelligence (AI). The firm believes that the adoption of AI technology will help accelerate the company's growth in the future.

Furthermore, Verint Systems has reaffirmed its financial guidance for the fiscal year 2025. The company also has set targets for the fiscal year 2027, aiming to achieve a 'rule-of-40' performance. This financial metric implies a combined revenue growth and EBITDA margin that equals 40%, specifically aiming for 10% revenue growth and a 30% EBITDA margin.

The maintained Buy rating reflects the analyst's confidence in Verint's market position and its ability to meet its long-term financial goals despite the recent challenges.

In other recent news, Verint Systems Inc. has reported a significant uptick in artificial intelligence (AI) bookings and bundled Software as a Service (SaaS) revenue in the second quarter of 2025. The company saw a 40% year-over-year increase in new AI bookings and a 15% rise in AI-driven bundled SaaS revenue.

This growth is expected to persist into the latter half of the year, with Verint on track to meet its full-year guidance of a 5% revenue growth and $2.90 in non-GAAP diluted earnings per share (EPS).

The recent developments reflect Verint's successful focus on AI in the customer engagement sector. This has not only attracted new clientele but also solidified the company's industry position. Verint, having completed a $200 million share buyback, announced a new buyback program of the same value, indicating a robust financial strategy.

However, the company noted lower than expected AI conversions, though this has not impacted overall revenue due to expansion in unbundled SaaS. As part of its long-term financial goals, Verint aims to achieve a Rule of 40 target in fiscal year 2027. These recent developments underscore Verint's commitment to AI innovation and financial growth.

InvestingPro Insights

Following TD Cowen's revised price target for Verint Systems (NASDAQ:VRNT), it's worth noting additional insights from InvestingPro. Verint's market capitalization stands at $1.84 billion, and while the company is trading at a high earnings multiple with a P/E ratio of 62.77, this reflects investor confidence in its future profitability. In fact, Verint is projected to be profitable this year, as indicated by analysts and supported by a solid net income growth expectation.

An InvestingPro Tip highlights that Verint's management has been actively buying back shares, which could be a sign of internal confidence in the company's value. Additionally, the company boasts a high shareholder yield, a metric that combines dividend payments and share repurchases to show how much a company is giving back to shareholders. It's important to note, however, that Verint does not pay a dividend, focusing instead on share repurchases.

For those interested in a deeper dive, InvestingPro offers further analysis and more InvestingPro Tips for Verint Systems, which can be found at https://www.investing.com/pro/VRNT. The additional tips and data provide a comprehensive look at the company's financial health and market potential, including real-time metrics and future projections.

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