Analyst Note| Dan Romanoff, CPA |
After many years of rumors and what-ifs, wide-moat Tyler finally announces what many long believed was a natural deal and that it is acquiring NIC for $2.3 billion. The company also reported mixed fourth-quarter results including weaker-than-anticipated revenue for both the quarter and within guidance, coupled with strong profitability. Much as it did coming out of the 2008 financial crisis, we expect Tyler will emerge in an even stronger position to capture market share, as its portfolio is broader and it is increasingly exposed to multiple solution sales. We rolled our model and adjusted our forecast for results, guidance, and NIC’s expected impact on the financials in the back half of the year, which combine to drive our fair value estimate to $475 per share, from $340.