Needham has revised its valuation outlook for Tyler Technologies, lowering the firm's price target to $400 from $750 but retaining a Buy recommendation on the shares. The adjustment follows Tyler's recently reported fourth-quarter results and comes amid a steep pullback in the stock over the past year.
In its assessment, Needham described Tyler's fourth-quarter performance as "solid," highlighting that SaaS bookings increased 9.6% year-over-year and surpassed the firm's expectations. Management also updated fiscal 2026 guidance for SaaS revenue to a range of 20.5% to 22.5%, with a midpoint of 21.5%, up from the company’s prior guidance of plus 20% for the year. Needham attributes the higher outlook to robust fourth-quarter bookings and what it called a positive start to 2026.
Despite these operational markers, the stock has seen a substantial decline, losing 55.62% over the last 12 months. InvestingPro data indicates Tyler Technologies is trading near its 52-week low of $283.71, and the relative strength index (RSI) shows the share price in oversold territory. InvestingPro's Fair Value assessment also signals that the shares are currently undervalued relative to that model.
Valuation metrics remain a point of tension. The company carries a price-to-earnings ratio of 47.12, which Needham notes is elevated compared with near-term earnings growth prospects. That disparity likely influenced the magnitude of the price-target cut even as the analyst team acknowledged the improving SaaS bookings trend.
Tyler's reported fourth-quarter 2025 results included a modest shortfall versus consensus on both the per-share and top-line figures. The company posted earnings per share of $2.64, below the expected $2.72, and reported revenue of $575.2 million versus an anticipated $591.03 million.
In response to the post-decline valuation, Needham expects Tyler to execute what would be the largest year of share repurchases in company history, reflecting management's and the analyst's view that the stock is materially de-rated. The firm also believes investor focus may shift back to the company's strong initial fiscal 2026 SaaS revenue growth forecast and to potential upside in transaction revenue as the year progresses.
Separately, Stifel has also modified its valuation for Tyler, lowering its price target to $400 from $550 while maintaining a Buy rating. Stifel tied its adjustment to the company's transition toward a subscription-heavy model, with software-as-a-service projected to represent a larger share of total revenue going forward.
Collectively, these developments highlight a mixed near-term picture: improving SaaS momentum and a raised FY26 SaaS growth guide on one hand, and recent earnings and revenue misses, an elevated P/E, and significant share price deterioration on the other.