Needham analyst Joshua Reilly reiterated a Buy rating on the shares of Tyler Technologies, Inc. (NYSE:TYL), with a price target of $475.
The analyst remains confident that the management’s $1 billion free cash flow target by 2030 will be driven primarily by gross margin improvement over the next several years as the Cloud transition accelerates.
The analyst believes the target will yield a 10.6% CAGR in share price over the next seven years, assuming multiple contractions consistent with scaling the business.
The growth strategy of Tyler is based on four pillars – leveraging the install base, expanding the TAM with State and Federal, Cloud transition, and growth in transactions, the analyst notes.
Reilly expects the ramping spending on R&D will bolster product capabilities and maintain their 98% gross dollar retention for Tyler Technologies.
As a step for cloud transition in the near term, the analyst adds that the company will shut down the Texas data center by the end of 2023 and the Maine data center by the end of 2024.
Price Action: TYL shares are trading lower by 0.49% to $392.66 on the last check Friday.
