Morgan Stanley has adjusted its price target for i3 Verticals (IIIV, Financial), reducing it from $27 to $25. Despite this revision, the firm maintains an Equal Weight rating on the stock. The decision comes as i3 Verticals plans to sell its Healthcare RCM division, known for its lower margins and slower growth. Morgan Stanley suggests that this move could benefit the company in the long run. However, the recent transactions have introduced some uncertainties that might cloud the view of i3 Verticals' growth trajectory following the sale of its Merchant business, according to the firm's analysis.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for i3 Verticals Inc (IIIV, Financial) is $31.00 with a high estimate of $35.00 and a low estimate of $25.00. The average target implies an upside of 22.24% from the current price of $25.36. More detailed estimate data can be found on the i3 Verticals Inc (IIIV) Forecast page.
Based on the consensus recommendation from 7 brokerage firms, i3 Verticals Inc's (IIIV, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for i3 Verticals Inc (IIIV, Financial) in one year is $24.05, suggesting a downside of 5.17% from the current price of $25.36. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the i3 Verticals Inc (IIIV) Summary page.
IIIV Key Business Developments
Release Date: May 09, 2025
- RemainCo Revenue: Increased 11.6% to $54.1 million for Q2 2025 from $48.5 million for Q2 2024.
- Organic Growth: $4.4 million or 9% for RemainCo.
- Annual Recurring Revenue: Increased 9.2% to $164.5 million for Q2 2025 compared to $150.6 million for Q2 2024.
- SaaS Revenue Growth: 23% for the quarter.
- Transaction-Based Revenue Growth: 8% for the quarter.
- Recurring Software Services Growth: 12% for the quarter.
- Nonrecurring Software License Sales: Increased to $2.8 million for Q2 2025 from $1 million for Q2 2024.
- Adjusted EBITDA: Increased 17% to $15.8 million for Q2 2025 from $13.5 million for Q2 2024.
- Adjusted EBITDA Margin: 29.3%, up from 27.9% for Q2 2024.
- Net Debt: $4 million as of March 31, 2025.
- Cash Position: Approximately $64 million after recent transactions.
- Fiscal 2025 Guidance for RemainCo: Revenue between $207 million to $217 million; Adjusted EBITDA between $56 million to $61 million.
- Pro Forma Adjusted Diluted EPS: $0.96 to $1.06 for fiscal 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- i3 Verticals Inc (IIIV, Financial) reported a 12% revenue growth in its public sector vertical market for the second quarter of 2025.
- SaaS revenue grew by 23%, indicating strong performance in recurring revenue streams.
- The company successfully divested its Healthcare RCM business, streamlining its focus on the public sector.
- The acquisition of a utility billing software company is expected to enhance i3 Verticals Inc (IIIV)'s offerings in the utilities market.
- The company has a strong balance sheet with a cash position of approximately $64 million and $400 million of borrowing capacity, positioning it well for future acquisitions.
Negative Points
- The divestiture of the Healthcare RCM business will result in a reduction of $39 million in revenues and $8 million in adjusted EBITDA for fiscal 2025.
- Ongoing trade friction between the US and Canada has led to the removal of $2.5 million in expected revenues from the fiscal 2025 outlook.
- The company expects a seasonal decline in public sector payments and software services revenues during Q3.
- There are ongoing delays with the Manitoba contract, impacting revenue expectations.
- The company faces challenges in maintaining consistent ARR growth, with a slight sequential decline noted.
