KeyBanc lowered its price target on i3 Verticals (NASDAQ:IIIV) to $30.00 from $32.00, while retaining an Overweight rating on the shares.
The firm made the adjustment after i3 Verticals released fiscal first-quarter results that presented a mixed picture. Revenue came in slightly above consensus, while adjusted EBITDA landed marginally below Street expectations.
Among the reported metrics, annual recurring revenue (ARR) grew 8.4% during the quarter. i3 Verticals kept its organic ARR growth guidance for the year in the 8-10% range.
KeyBanc singled out the company’s Software as a Service - SaaS - performance as a notable positive. Commentary accompanying the results suggested that organic SaaS growth could remain north of 20% through fiscal year 2026.
The company raised its overall guidance, but KeyBanc observed that the updated outlook includes nine months of inorganic growth contribution, and that organic revenue growth was slightly lower than prior expectations.
On the headline numbers, i3 Verticals reported fiscal first-quarter earnings for 2026 that surpassed analyst estimates. The company posted earnings per share of $0.26, compared with a projected $0.24, representing an 8.33% surprise. Quarterly revenue totaled $52.7 million, versus the $52.16 million consensus, and represented a 1% increase year-over-year.
Despite the EPS and revenue beats, i3 Verticals faced pressure on profitability. The company experienced declining EBITDA margins and noted increased hosting costs during the period.
Following the earnings release, both DA Davidson and Benchmark reiterated Buy ratings on i3 Verticals, assigning price targets of $35 and $39, respectively. Those analyst actions were issued in the wake of the company’s report and emphasized the modest revenue growth the company delivered. The reaffirmed Buy ratings indicate continued analyst confidence despite the margin and cost challenges highlighted in the results.
What this means
The move by KeyBanc to lower its price target reflects a valuation adjustment even as the firm keeps a favorable rating. Investors and market participants will likely weigh the company’s strong SaaS growth and ARR expansion against margin headwinds and rising hosting expenses.