Valhi (VHI) Stock Forecast & Price Target

Valhi Inc. is projected to experience significant financial growth, with EBITDA anticipated to increase at a compound annual growth rate (CAGR) of 37%, rising from $25 million in FY25 to $47 million by FY27, while expanding its margin from 24.2% to 30.1%, indicating effective operating leverage. Furthermore, the company's earnings per share (EPS) is expected to grow by 23% over the next 12 months, substantially outperforming its Canadian software consolidator peers, which are forecasted to achieve EPS growth rates of 12% and 13%, respectively. Additionally, eReferral volumes in Ontario, relevant to its operational context, demonstrated robust growth, increasing by 35% year-over-year in FY24 and showing an impressive CAGR of 86% over the past five years, suggesting a favorable market environment for the company.

Valhi Inc. faces significant challenges in its operational segments, particularly evident in the drastic 57% decline in revenue from the Attend Anywhere platform over the past two years, attributed to pricing pressures and increased competition from Microsoft Teams. The NHS's productivity has not recovered from COVID-19 disruptions, with estimates indicating a shortfall of 11% compared to pre-pandemic levels, which adversely affects demand for related services. Additionally, the anticipated drop in EBITDA margin from 26.4% in Q2 FY25 to 21.5% in Q3 FY25 raises concerns over the company's profitability in the near term, despite a projected recovery within the next year.