Valhi (VHI) Stock Forecast & Price Target

Valhi Inc. is expected to experience significant financial growth, with EBITDA anticipated to rise at a 37% compound annual growth rate (CAGR) from $25 million in FY25 to $47 million in FY27, indicating an expanding profit margin from 24.2% to 30.1% during the same period driven by operational efficiencies. Additionally, the company’s earnings per share (EPS) are projected to increase by 23% over the next 12 months, outpacing peers in the Canadian software sector, which are expected to grow at rates of 12% and 13%. The robust growth metrics in EBITDA and EPS suggest a strong operational performance and a positive outlook for Valhi's stock driven by its core segments, particularly the Chemicals division that significantly contributes to revenue generation.

Valhi Inc. is facing a challenging financial landscape, particularly evident from the significant 57% decline in Attend Anywhere revenue over the past two years, now at £5.0 million, attributed to pricing pressures from the NHS's shift to usage-based pricing and competition from platforms like Microsoft Teams. Additionally, the NHS's productivity continues to lag, remaining 11% below pre-pandemic levels, which could adversely impact demand for Valhi's services. Furthermore, while the company anticipates a recovery in EBITDA margins from 21.5% to 25% over the next four quarters, the initial drop from 26.4% in Q2/FY25 raises concerns regarding the stability of its profit margins moving forward.