Strategic Shift to Public Sector Boosts i3 Verticals’ Growth Potential: Buy Rating Reiterated

In a report released today, Mark Palmer from Benchmark Co. reiterated a Buy rating on I3 Verticals (IIIV – Research Report), with a price target of $33.00.

Mark Palmer has given his Buy rating due to a combination of factors that highlight i3 Verticals’ strategic shift and growth potential. The company recently sold its healthcare revenue cycle management business to focus solely on its Public Sector vertical, which has demonstrated higher revenue growth and better adjusted EBITDA margins compared to the Healthcare vertical. This strategic move is expected to be immediately beneficial to the company’s financial performance.
Furthermore, the sale was completed at a reasonable price, and the Public Sector vertical is anticipated to continue its low-double-digit revenue growth. The divestiture aligns i3 Verticals more closely with companies like Tyler Technologies, potentially narrowing the valuation gap. Despite the reduction in revenue and EBITDA estimates for FY25 due to the divestiture, the focus on the Public Sector is seen as a positive long-term strategy, supporting the reiterated Buy rating and a price target of $33.

In another report released on April 29, D.A. Davidson also maintained a Buy rating on the stock with a $34.00 price target.