Raymond James raises i3 Verticals stock price target to $39 on strong results

i3 Verticals (IIIV) reported strong fiscal Q3 2025 results, exceeding Street expectations with a 2% revenue upside, 4% adjusted EBITDA beat, and $0.23 adjusted EPS on $51.9 million revenue. Raymond James subsequently raised its price target to $39 from $33, maintaining a Strong Buy rating, as the stock trades near its 52-week high at $32. The firm highlighted IIIV's robust organic growth (8% in Q3), accelerating annual recurring revenue (12%), and a projected high single-digit normalized organic growth with 50-100 basis points of EBITDA margin expansion, supported by a strong balance sheet and an estimated $350 million M&A capacity, valuing the stock at approximately 14x Raymond James' 2027 estimated EBITDA.

Analysis

i3 Verticals (IIIV) delivered a strong fiscal third-quarter 2025, beating consensus estimates with revenue of $51.9 million and an adjusted EPS of $0.23, representing a 4.03% and 9.52% beat, respectively. The company's underlying performance metrics are robust, highlighted by 8% organic growth and an impressive 90.72% gross profit margin. A key positive indicator is the acceleration in annual recurring revenue (ARR) growth, which increased 300 basis points to 12%. Despite this momentum, the company maintained its full-year revenue guidance, which implies a deceleration in fiscal fourth-quarter organic growth to approximately 3%. Management attributes this slowdown to challenging nonrecurring comparisons of about 400 basis points, while affirming that double-digit ARR growth is expected to continue. Looking ahead, informal guidance for fiscal 2026 points to high single-digit normalized organic growth coupled with 50-100 basis points of EBITDA margin expansion. The company's growth strategy is further supported by a strong balance sheet, with a current ratio of 2.02, and significant M&A capacity, estimated by Raymond James at approximately $350 million. In response to these results, Raymond James raised its price target to $39.00 from $33.00, reiterating a Strong Buy rating and viewing the stock as a compelling public sector software play trading at approximately 14 times its 2027 estimated EBITDA.

Key Decisions for Investors

• Given the strong Q3 earnings beat, accelerating annual recurring revenue, and a raised price target from a key analyst, the positive momentum appears fundamentally supported.
• Investors should monitor Q4 results to validate management's explanation for the projected organic growth slowdown, ensuring it is due to nonrecurring item comparisons rather than a deterioration in core business activity.
• The firm's M&A capacity, estimated at $350 million, presents a significant potential catalyst, making any future deal announcements a key event to watch for.
• While fundamentals are strong, the stock is trading near its 52-week high, and investors should consider that the current valuation may already reflect much of the positive outlook.