Joshua Reilly, an analyst from Needham, maintained the Buy rating on Tyler Technologies (TYL – Research Report). The associated price target remains the same with $750.00.
Joshua Reilly has given his Buy rating due to a combination of factors that highlight Tyler Technologies’ potential for growth despite current market challenges. The company’s recent quarterly performance showed a solid increase in SaaS ARR by 21% year-over-year, indicating robust growth in recurring revenue. However, concerns arose as the net new SaaS ARR was down by 8% year-over-year, and the ARR from new SaaS deals fell short of expectations at $7.9 million.
Reilly attributes these issues primarily to timing, noting that elongated sales cycles are a result of widespread economic uncertainty affecting both private and public sectors. Despite these challenges, Tyler Technologies is poised to benefit from a shift towards government efficiency, with limited exposure to direct DOGE cuts. Furthermore, the company’s valuation has returned to its five-year average, suggesting that its fundamentals are strengthening. Consequently, Reilly sees the current dip as a buying opportunity, supported by the potential for increased business leverage and higher free cash flow.