Loading...
Back to narrative

Update shared on09 Oct 2025

Fair value Decreased 8.62%
AnalystConsensusTarget's Fair Value
US$53.00
19.6% undervalued intrinsic discount
09 Oct
US$42.61
Loading
1Y
-13.5%
7D
1.2%

Analysts have lowered their price target for ScanSource from $58 to $53 per share. They cite expectations for only modest margin improvement due to ongoing competitive pressures and continued investments in sales channels.

Analyst Commentary

Analyst sentiment on ScanSource reflects both optimism over the company’s evolving business model and caution surrounding the external landscape and internal investments.

Bullish Takeaways

  • There is a positive outlook on ScanSource’s hybrid distribution approach, which is expected to help accelerate gross profit growth compared to operating expenses.
  • Ongoing management emphasis on boosting recurring revenue streams is viewed as a pathway to improved margin predictability and more stable cash flow over time.
  • Efforts to enhance free cash flow conversion are contributing to constructive views on long-term value creation for shareholders.
  • Internal strategic initiatives, such as raising EBITDA margins, are supporting measurable progress toward financial targets.

Bearish Takeaways

  • Competitive pressures in the technology services distribution market are expected to limit meaningful margin expansion in the near term.
  • Significant investments in the sales force and channel infrastructure could constrain profitability improvement in the short term.
  • Projections indicate only modest EBITDA margin gains for the next fiscal year, which could temper expectations for substantial valuation upside.
  • Forecasted cash flow and earnings improvements depend on external market dynamics and successful execution of strategic initiatives.

What's in the News

  • ScanSource completed the repurchase of 681,035 shares, representing 2.97% of shares outstanding, for $25.07 million as part of a larger buyback program that has totaled over 4.5 million shares since August 2021 (Key Developments).
  • The company announced it is actively seeking new acquisitions. Leadership noted that recent acquisitions have contributed positively to earnings and return on invested capital (Key Developments).
  • ScanSource provided earnings guidance for fiscal year 2026, projecting net sales of between $3.1 billion and $3.3 billion (Key Developments).

Valuation Changes

  • Consensus Analyst Price Target has decreased from $58 to $53 per share, reflecting a reduction of approximately 8.6%.
  • Discount Rate has risen slightly, increasing from 8.58% to 8.66%. This indicates a modest increase in perceived risk for future cash flows.
  • Revenue Growth projections remain virtually unchanged and are holding steady near 4.37%.
  • Net Profit Margin estimates are also essentially flat, staying consistent at about 2.71%.
  • Future P/E ratio forecast has fallen from 13.47x to 12.33x. This suggests a modest decrease in expected valuation multiples.

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.