In what seems to be a remarkable evolution, NCR Voyix (VYX) appears to have made a successful leap into the digital age and grabbed investors’ attention. The Company has undergone an ambitious transition, leaving its legacy hardware products behind, as it moved into the world of cloud-based Software as a Service (SaaS) solutions in October 2023. This transformation was not just a business model shift but also included spinning off its ATM business to focus solely on high-margin value-added services.
NCR Voyix is now a point-of-sales (POS) software provider for diverse sectors. After beating top-and-bottom-line expectations for the last quarter, the stock has climbed 18% and represents a potentially attractive addition to the portfolios of long-term value investors.
NCR Voyix’s Ongoing Evolution
NCR VOYIX provides platform-centric SaaS and service capabilities to retail stores, restaurant systems, and digital banking experiences. However, the company is reportedly considering selling its digital banking division. Goldman Sachs (GS) oversees this process after being appointed by NCR to garner prospective buyers’ interest.
Private equity firms and other payment processors are considered to be the most interested. According to Reuters, well-known buyout firms, such as TPG (TPG) and Warburg Pincus, intend to bid for the digital banking unit, with numbers reaching as much as $3B.
NCR Voyix’s Recent Financial Results & Outlook
The company outperformed analysts’ expectations in Q1 2024, delivering $862 million, surpassing the consensus projection of $856.89 million. The transformation initiatives have started to bear fruit, driving a 2% year-over-year increase in revenue from software and services. Total Segment ARR increased by 5%, while Software ARR increased by 6%. Adjusted EBITDA rose 10%, and the company posted earnings per share of $0.13, notably higher than the analysts’ estimate of $0.03.
Management has issued guidance for the year, with Projected total revenue ranging between $3.6 billion and $3.7 billion. This includes expected revenue from Software and Services between $2.7 billion and $2.75 billion, and Hardware revenue is projected between $900 million and $950 million. The Company’s Adjusted EBITDA is estimated to lie between $632 million and $657 million, and its Unrestricted Adjusted Free Cash Flow is forecasted to be between $155 million and $185 million.
What Is the Price Target for VYX Stock?
The stock has been volatile, with a beta of 1.64, as it’s trended down 12% over the past year. It trades toward the middle of its 52-week price range of $10.99 – $19.01 and shows positive price momentum, trading above its 20-day (13.37) and 50-day (13.07) moving averages. With a P/S ratio of 0.73x, the stock trades at a discount to industry peers, with the Information Technology Services industry P/S average of 2.1x.
Analysts covering the company have been bullish on the stock. For example, Stifel analyst J. Parker Lane recently initiated coverage on the shares with a Buy rating and a $16 price target, noting the company’s established customer base and recent transition as a tailwind to help drive growth in a more focused manner.
Based on five analysts’ recommendations and price targets, NCR Voyix is rated a Strong Buy overall. The average price target for VYX stock is $18.80, representing a potential 30.10% upside from current levels.
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Final Analysis on NCR Voyix
NCR Voyix’s shift from legacy hardware products to high-margin, value-added cloud-based SaaS solutions has thus far resulted in a financial upturn, surpassing analysts’ expectations and driving double-digit share price growth. Further, the company is considering selling its digital banking division, which, if successful, could garner as much as $3B, helping to stabilize the balance sheet and drive focused growth. The stock trades at a discount and offers potential upside, making it an attractive target for disciplined value investors.
