Last Update 15 Nov 25
Fair value Increased 1.22%JKHY: Fiscal 2026 Guidance And Sector Pressures Will Shape Outlook
The average analyst price target for Jack Henry & Associates has edged higher to $179.17 from $177, as analysts cited modest forecast improvements and a solid sales pipeline, despite ongoing sector headwinds.
Analyst Commentary
Recent street research on Jack Henry & Associates reflects both optimism and caution among analysts as the company navigates persistent sector challenges. The following summarizes key themes in analyst commentary.
Bullish Takeaways- Bullish analysts remain encouraged by the company's consistent sales bookings. They note that management has highlighted a robust sales pipeline, supporting long-term growth prospects.
- Some forecast revisions have been characterized as modest, with continued Buy ratings maintained. This suggests confidence in execution and relative valuation stability despite minor target reductions.
- The company continues to achieve strong core and complementary wins, helping to underpin overall financial performance even as some forecasts are fine-tuned.
- Bearish analysts point to ongoing revenue pressure anticipated in fiscal 2026. They warn that factors such as bank industry consolidation and the acceleration of bank mergers could prolong this impact.
- The company has faced lowered price targets from several analysts, often tied to lighter-than-expected long-term guidance and price compression in contract renewals.
- Recent market rotation toward AI-centric stocks within the Payments sector and instances of subpar execution have created a challenging environment for Jack Henry and peers. This has diluted investor enthusiasm in the near term.
- Industry trends, including restructuring of third-party contracts, are seen as adding volatility to Jack Henry's forward outlook.
What's in the News
- Keefe Bruyette lowered Jack Henry's price target twice in recent updates, first to $180 and then to $178. Both were maintained at a Market Perform rating, citing revenue pressure expected in fiscal 2026 and risks from increasing bank merger activity (Keefe Bruyette).
- Jack Henry & Associates provided full-year fiscal 2026 guidance, forecasting GAAP revenue between $2,491 million and $2,514 million, and GAAP EPS in the range of $6.38 to $6.49.
- QCR Holdings, Inc. selected Jack Henry to modernize its technology infrastructure and standardize operations across its four subsidiary banks, expanding an existing relationship to include all banking subsidiaries.
- Jack Henry raised its deconversion revenue estimates to $20 million for fiscal 2026, reflecting stronger results from the first quarter of the fiscal year.
Valuation Changes
- Consensus Analyst Price Target has risen slightly, increasing from $177 to $179.17.
- Discount Rate decreased modestly, moving from 7.37% to 7.32%.
- Revenue Growth expectations have edged higher, from 6.15% to 6.23%.
- Net Profit Margin improved slightly, rising from 19.13% to 19.28%.
- Future P/E ratio has fallen, changing from 29.02x to 27.72x.
Key Takeaways
- Accelerated shift to cloud and digital banking solutions is boosting recurring revenue, margins, and long-term client retention among larger financial institutions.
- Heightened demand for compliance, fraud prevention, and modernization initiatives is strengthening pricing power, operational efficiency, and sustained earnings growth.
- Consolidation, pricing pressures, limited diversification, fintech competition, and shifting technology are straining growth, compressing margins, and threatening Jack Henry's long-term market position.
Catalysts
About Jack Henry & Associates- A financial technology company that connects people and financial institutions through technology solutions and payment processing services that reduce the barriers to financial health.
- The company is experiencing accelerated adoption of its cloud-native platforms and SaaS offerings (cloud revenue up 11% year-over-year, now 32% of total revenue and 77% of core clients hosted in private cloud), which is expected to drive higher recurring revenue, improved margins, and higher free cash flow conversion as legacy on-premise contracts decline.
- Jack Henry's strong momentum in serving larger financial institutions-recent new core client wins in the $1B+ and $5-10B asset ranges, with the total assets of new core clients nearly tripling over three years-supports longer-term revenue and earnings growth as larger institutions typically have stickier, higher-value contracts and longer implementation cycles that ramp up over subsequent fiscal periods.
- Robust growth in digital adoption and real-time payment solutions (Banno platform users up 17% year-over-year, expanded contracts for Zelle, FedNow, and RTP, and new offerings like Tap2Local and Rapid Transfers) positions Jack Henry to benefit from the broad industry migration to digital-first banking, enhancing competitive differentiation and likely bolstering both top-line growth and long-term client retention.
- Increasing regulatory scrutiny and cybersecurity concerns among financial institutions are driving heightened demand for Jack Henry's compliance-focused and fraud prevention solutions (e.g., strong Financial Crimes Defender contract growth and ongoing regulatory alignment such as Fedwire ISO 20022 migration), reinforcing pricing power and driving opportunity for bundled sales that support both revenue and margin expansion.
- The successful technology modernization and process improvement initiatives (including cross-functional AI deployment and componentized development to reduce duplication) are lowering the cost structure and supporting operational discipline, manifesting in consistent non-GAAP margin expansion guidance (20-40bps per year) and improved returns on invested capital, which should sustain higher earnings and free cash flow growth over time.
Jack Henry & Associates Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Jack Henry & Associates's revenue will grow by 6.3% annually over the next 3 years.
- Analysts assume that profit margins will increase from 19.2% today to 19.9% in 3 years time.
- Analysts expect earnings to reach $567.4 million (and earnings per share of $7.78) by about September 2028, up from $455.7 million today. The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 29.1x on those 2028 earnings, up from 26.0x today. This future PE is greater than the current PE for the US Diversified Financial industry at 16.5x.
- Analysts expect the number of shares outstanding to decline by 0.12% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.42%, as per the Simply Wall St company report.
Jack Henry & Associates Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Ongoing consolidation among banks and credit unions is accelerating, which reduces Jack Henry's addressable customer base and creates persistent near-term and potentially long-term revenue headwinds, potentially leading to lower revenue growth rates than in previous years.
- Industry-wide pricing pressure, especially during contract renewals and from aggressive competitors, is compressing contract values and margins on both new and existing clients, which could limit Jack Henry's pricing power and result in reduced net margins or slower earnings growth.
- Slowing organic account growth at Jack Henry's core clients (including credit unions and banks), due to competition from neobanks, fintechs, and changing consumer behavior, may limit transaction volume growth and thus constrain long-term recurring revenue expansion.
- Heavy reliance on the U.S. regional banking sector, coupled with limited international diversification, exposes Jack Henry to regional banking downturns and reduces resilience, which could heighten revenue and earnings volatility during sector-specific headwinds.
- Accelerating transition to cloud-native, open-architecture, and API-driven fintech platforms, and heightened competition from more agile fintech or big tech entrants, increases customer churn and threatens Jack Henry's market share, requiring significant ongoing R&D spend that could dilute margins.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $185.091 for Jack Henry & Associates based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $206.0, and the most bearish reporting a price target of just $173.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.9 billion, earnings will come to $567.4 million, and it would be trading on a PE ratio of 29.1x, assuming you use a discount rate of 7.4%.
- Given the current share price of $162.75, the analyst price target of $185.09 is 12.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
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.
Read more narratives
There are no other narratives for this company.
View all narratives