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Tyler Technologies, Inc. (TYL), headquartered in Plano, Texas, provides integrated information management solutions and services. With a market cap of $25.9 billion, the company's client base includes local government offices throughout the U.S., Canada, Puerto Rico, and the United Kingdom.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and TYL perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the software application industry. TYL’s successful transition to a SaaS-based revenue model highlights its adaptability to market demands and provides a more predictable and recurring revenue stream, bolstering financial stability. TYL's core products, such as Munis, Odyssey, and payment solutions, along with various add-on modules, position the company as a comprehensive provider for its clients.
Despite its notable strength, TYL slipped 5.2% from its 52-week high of $638.56, achieved on Dec. 5. Over the past three months, TYL stock gained 4.8%, outperforming the S&P 500 Index’s ($SPX) 4% gains during the same time frame.
In the longer term, shares of TYL rose 44.8% on a YTD basis and climbed 48% over the past 52 weeks, underperforming SPX’s YTD gains of 24.3% and 26.2% returns over the last year.
To confirm the bullish trend, TYL has been mostly trading above its 200-day moving average over the past year, with slight fluctuations. However, despite a positive price momentum, the stock is trading below its 50-day moving average recently.
Tyler Technologies has seen significant market growth driven by strong SaaS adoption, transaction revenue growth, and record free cash flow. Its success is also attributed to cloud efficiency initiatives and successful cross-selling efforts. Recently, Tyler partnered with CourtCall to enhance remote court hearings with virtual collaboration tools. This partnership is expected to increase the number of clients in the legal market. Tyler has also gained numerous clients in the government, healthcare, and education sectors this year. With expanding offerings and new partnerships, Tyler is positioned to further expand in the public sector market, which has ample room for growth as organizations transition to cloud-based systems.
On Oct. 23, TYL shares closed down marginally after reporting its Q3 results. Its adjusted EPS of $2.52 beat Wall Street expectations of $2.44. The company’s revenue was $543.3 million, falling short of Wall Street forecasts of $546.4 million. TYL expects full-year adjusted EPS to be between $9.47 and $9.62, and expects revenue in the range of $2.1 billion to $2.2 billion.
TYL’s rival, Cadence Design Systems, Inc. (CDNS) shares lagged behind the stock, with a 10.7% uptick on a YTD basis and solid 11.3% gains over the past 52 weeks.
Wall Street analysts are bullish on TYL’s prospects. The stock has a consensus “Strong Buy” rating from the 16 analysts covering it, and the mean price target of $674.12 suggests a potential upside of 11.3% from current price levels.
