Valhi (VHI) Stock Forecast & Price Target

Valhi Inc. is poised for strong financial performance, with projected EBITDA set to rise at a 37% compound annual growth rate (CAGR), increasing from $25 million in FY25 to $47 million in FY27, while EBITDA margins are expected to expand from 24.2% to 30.1% during the same period due to operating leverage. Additionally, the company's earnings per share (EPS) is forecasted to grow by 23% over the next 12 months, significantly outperforming peer averages in the Canadian software consolidation sector. The robust growth in revenue deriving from its Chemicals segment, particularly through titanium dioxide production, as well as favorable trends in eReferral volumes, underscores the solid fundamentals supporting a positive outlook for Valhi's stock.

Valhi Inc. faces significant revenue challenges, particularly highlighted by a 57% decline in Attend Anywhere's revenue over the past two years, falling to £5.0MM in FY25, largely due to pricing pressures from the NHS's shift to usage-based pricing and increased competition from Microsoft Teams. Additionally, the ongoing decline in NHS productivity, which is estimated to be 11% below pre-pandemic levels, further exacerbates the financial strain on the company, particularly within its healthcare-related offerings. The anticipated drop in EBITDA margin from 26.4% in Q2/FY25 to 21.5% in Q3/FY25 underscores the tightening financial outlook, despite expectations for recovery in subsequent quarters.