TYL: Durable SaaS Recurring Revenue Will Drive Future Upside Despite Lowered Expectations

Analysts have modestly reduced their price targets for Tyler Technologies, with the blended fair value estimate easing by about $1.57 to approximately $648. This reflects slightly lower long term revenue growth assumptions and a more conservative terminal multiple, despite continued confidence in durable SaaS driven recurring revenue and profit expansion.

Analyst Commentary

Street research following the latest quarterly update shows a cluster of price target reductions between roughly $540 and $675. However, the tone of the commentary remains broadly supportive of Tyler Technologies' long term growth and margin expansion profile. The lower targets primarily reflect recalibrated growth assumptions and valuation multiples rather than a fundamental shift in confidence around execution.

Bullish Takeaways

• Bullish analysts highlight solid Q3 performance, with results viewed as supportive of the thesis that Tyler can sustain healthy top line growth while expanding margins and cash flow.
• Commentary emphasizes durable SaaS and subscription momentum, with recurring revenue expected to remain the key driver of longer term value creation and earnings visibility.
• Early 2026 guidance is seen as constructive. This helps reinforce the view that management can navigate macro and sector volatility while maintaining double digit revenue growth.
• Some bullish analysts see the evolving narrative into 2026 as a potential catalyst for sentiment improvement across application software, which could support Tyler's valuation multiples over time.

Bearish Takeaways

• Bearish analysts are trimming long term revenue CAGR assumptions, with some moving from mid teens expectations closer to the low teens. This shift pressures fair value estimates despite steady execution.
• Several price target cuts are tied to more conservative terminal multiples, reflecting broader sector de rating and concerns that prior valuation levels may not be sustainable.
• Modest reductions to FY26 and FY27 revenue forecasts signal caution around the pace of SaaS growth and the timing of potential re acceleration, even as the core thesis remains intact.
• Lingering investor concern around the trajectory of software as a service growth keeps some analysts on the sidelines. This contributes to more neutral ratings and a narrower upside skew in target prices.

What's in the News

• Truist lowered its price target on Tyler Technologies to $675 from $775, citing a more conservative long term revenue CAGR assumption of 12 percent versus 14 percent prior, while maintaining a Buy rating and highlighting confidence in durable SaaS and recurring revenue growth (Periodicals).
• The city of Homestead, Florida, went live on Tyler's Enterprise Permitting and Licensing cloud platform on AWS, replacing a legacy system and unifying permitting, licensing, code enforcement, and payments across departments through an integrated, guided community portal (Key Developments).
• Tyler issued 2025 guidance calling for total revenue between $2.335 billion and $2.360 billion, implying roughly 10 percent growth at the midpoint, and GAAP diluted EPS between $7.28 and $7.48, with potential variability from discrete tax items (Key Developments).
• Between July 1, 2025 and October 29, 2025, Tyler repurchased 300,000 shares for $173 million, bringing total buybacks under its long standing repurchase program to 20,888,432 shares for approximately $830 million, or about 51.95 percent of shares targeted (Key Developments).

Valuation Changes

• The fair value estimate has edged down slightly, from approximately $649.83 to $648.26 per share, reflecting modestly more conservative assumptions.
• The discount rate has risen slightly, from about 8.49 percent to 8.53 percent, implying a marginally higher required return on equity.
• Revenue growth has increased modestly, with the long-term annual growth assumption moving from around 8.81 percent to 8.91 percent.
• The net profit margin has slipped very slightly, from roughly 16.84 percent to 16.81 percent, indicating a nearly unchanged long-term profitability outlook.
• The future P/E multiple has declined marginally, from about 71.57x to 71.40x, signaling a slightly more conservative terminal valuation assumption.