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Since announcing its plans for share repurchases, Agilysys, Inc. (AGYS) has acquired approximately 27% of its outstanding shares. The company appears to be on track with the integration of its acquisitions, and its once lofty goal of achieving a $1.5 billion revenue run rate by 2010 is now well within sight.
Although SG&A [sales, general & administrative costs] is running slightly ahead of expectations, we believe the company is more or less on track with integrations and risk is passing with time. We therefore reiterate our Buy rating and $24 price target on AGYS shares.
We believe the company will reach normalized EBITDA margins of over 6% by fiscal 2010, equal to EBITDA of $3.14 per share. At a multiple of 10 times EBITDA, this gives us a fiscal 2010 valuation of $31.40 per share. If we discount this at a rate of approximately 15%, we arrive at a present value of approximately $24.00.
Read the full analyst report on AGYS
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