On Monday, BMO Capital Markets adjusted its outlook on i3 Verticals (NASDAQ:IIIV), a provider of integrated payment and software solutions, by increasing the stock’s price target from $22.00 to $26.00. The firm has maintained a Market Perform rating on the shares. The stock has shown remarkable momentum, gaining over 13% in the past week and 51% over the last year. According to InvestingPro data, the stock is currently trading near its 52-week high.
According to the BMO Capital Markets analyst, i3 Verticals’ first fiscal quarter of 2025 results surpassed expectations, primarily due to a significant uptick in organic growth. This improvement was partly attributed to the advance recognition of one-time revenues and a comparably easier previous year’s performance. The company’s progress towards reaching its high single-digit long-term organic growth target was noted as a positive development. InvestingPro data reveals impressive gross profit margins of 91.5% and strong revenue growth of 20.8% over the last twelve months.
The analyst highlighted i3 Verticals’ robust merger and acquisition (M&A) strategy as a key driver for potential growth, with the company anticipating the completion of three to five acquisitions during the fiscal year 2025. This active M&A approach is expected to contribute to upward revisions in both company guidance and consensus estimates.
Minimal adjustments were made to the firm’s long-term estimates for i3 Verticals, but the increase in the price target to $26.00 reflects a higher valuation multiple. This adjustment is based on the company’s accelerated trajectory of organic growth, as recognized by the analyst’s updated assessment.
In other recent news, i3 Verticals reported first-quarter revenue and adjusted EBITDA that surpassed Wall Street’s expectations, primarily due to the timing of license revenue recognition. This was noted by KeyBanc Capital Markets, who raised their stock target for i3 Verticals to $32.00 from the previous $27.00, maintaining an Overweight rating on the stock. The company’s Annual Recurring Revenue (ARR) experienced a slight acceleration, and organic revenue growth was approximately 10%. i3 Verticals is on track with its balance sheet deleveraging and is moving forward with its anticipated three to five acquisitions planned for fiscal year 2025.
In other developments, i3 Verticals recently conducted a series of recapitalization actions to address excess cash on its balance sheet. The company made a Capital Contribution of approximately $21.4 million in cash to its subsidiary, i3 Verticals, LLC, in exchange for newly-issued common units. Following these recapitalization steps, i3 Verticals now holds approximately 70.83% of the outstanding common units, an increase from its previous ownership.
These are among the recent developments for i3 Verticals, a technology-driven payment solutions company. The company’s strategy for future price increases should support its high single-digit growth target, as noted by KeyBanc analyst Alex Markgraff. The recapitalization actions aim to optimize the company’s cash position for operational purposes.
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