On Friday, ACI Worldwide (NASDAQ:ACIW), a provider of global software and payment solutions, received a new Buy rating for the stock from Jefferies, accompanied by a price target of $38.00.
The firm's banking business was highlighted as its crown jewel, thanks to factors such as an average contract length of five years, high client retention, and the ability to consistently increase prices upon contract renewal due to customer demand for higher capacity to support volume growth.
The company's stable growth trajectory is bolstered by opportunities for cross-selling and acquiring new customers, which could add an additional 2-3 percentage points to its growth. Jefferies identified significant cross-selling opportunities in areas such as real-time payments, anti-fraud solutions, and SaaS/cloud services, which are expected to contribute to a reacceleration of growth to over 7% in the medium term.
Jefferies' financial projections for ACI Worldwide are optimistic, with the firm's fiscal year 2024 and 2025 EBITDA estimates exceeding the consensus. This positive outlook is based on the company's diversified portfolio and strategic growth initiatives, which are anticipated to drive performance and shareholder value in the coming years.
ACI Worldwide's focus on its primary segments—banks, merchants, and billers—has positioned it to capitalize on the increasing demand for advanced payment solutions. The company's strategic focus and robust financial outlook as outlined by Jefferies reflect confidence in its capacity to navigate the competitive payments landscape successfully.
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