- Oppenheimer analyst Brian Schwartz initiated coverage on Agilysys Inc AGYS at Outperform and a price target of $105.
- The analyst believes the company derives a competitive advantage from technological advancements in frictionless data ingestion, smooth third-party systems integrations, workflow, and presentation.
- Schwartz projects present market opportunity for Agilysys to be over $4 billion in the underserved hospitality sector, with only a small portion served by pure-play SaaS vendors.
- The analyst sees Agilysys as capturing share from the legacy suppliers that offer outdated and disjointed solutions in the hospitality industry.
- He believes the company's products effectively solve real problems for staff and guests in hospitality businesses by optimizing operations and improving the guest experience and loyalty.
- Schwartz is bullish on Agilysys's deal with Marriott International MAR, covering over 300K rooms through Property Management Systems software products.
- The analyst believes the deal may expand deployed PMS rooms by 3x over the next three years and drive operating leverage.
- The analyst sees Agilysys' inconsistent quarterly results, deceleration in subscription revenue growth and slower EBITDA margin improvement as a matter of concern.
- Schwartz forecasts revenue growth of 28%, 25%, and 26% in 2023, 2024 and 2025, respectively. He projects adjusted EBITDA margin of 15% each in 2023 and 2024 and 17% in 2025.
- Price Action: AGYS shares are trading higher by 3.74% at $85.77 on the last check Thursday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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