DA Davidson has kept a Buy designation on Jack Henry with a $216.00 price objective following the financial technology firm’s fiscal second-quarter performance, which topped analyst forecasts. According to available analyst data, the $216 target implies notable upside relative to the prevailing share price of $166.16, while analyst targets across the market run from $168 to $220. A Fair Value assessment indicates the company currently appears undervalued.
For the fiscal second quarter ended in December, Jack Henry reported GAAP revenue of $619.0 million, an 8% increase year-over-year. That total exceeded DA Davidson’s projection by $6 million, or roughly 1%, and came in about 2% above consensus estimates. The company’s revenue performance is consistent with its 7.74% revenue expansion over the trailing twelve months, accompanied by a 23% return on equity.
One item that affected the quarter was deconversion fee revenue. Jack Henry recognized $6.2 million in deconversion (one-time contract termination) fees during the fiscal second quarter, versus $0.1 million in the year-ago period, as disclosed in a recent Form 8-K filing. Excluding these one-time fees from both periods, the company’s Non-GAAP revenue rose 7% year-over-year to $611 million, which also topped DA Davidson’s forecast by about 1%.
Following the quarter, Jack Henry’s management adjusted their initial fiscal 2026 outlook. They increased their GAAP revenue forecast by 1% and raised GAAP operating income guidance by 2%. Management also lifted their full-year projection for deconversion fee revenue to $28.0 million from a prior estimate of $20.0 million.
The company’s reported operating results further beat street expectations. Jack Henry posted adjusted earnings per share of $1.72 for the quarter, well above the analyst consensus of $1.42. Revenue for the period was reported at $619.33 million, exceeding estimates of $609.1 million and representing a 7.9% year-over-year rise. These figures reflect expansion across the company’s principal revenue streams for the financial technology provider.
DA Davidson’s reiterated Buy rating and $216 target reflect the firm’s view of upside tied to the company’s revenue and earnings momentum, as well as the recent upward tweaks to full-year guidance. Analyst target estimates and the Fair Value assessment cited indicate varying market expectations, with some analysts placing their price objectives as low as $168 and others as high as $220.
Key takeaways
- Jack Henry reported GAAP revenue of $619.0 million for the fiscal second quarter - an 8% year-over-year increase and $6 million above DA Davidson’s forecast.
- One-time deconversion fees of $6.2 million materially impacted reported revenue; excluding those fees, Non-GAAP revenue grew 7% to $611 million.
- Management tightened fiscal 2026 guidance, raising GAAP revenue and operating income forecasts and increasing expected deconversion fee revenue to $28.0 million.
Sectors affected: Financial technology, banking services, and enterprise software.
Risks and uncertainties
- Reliance on one-time deconversion fees - The quarter included $6.2 million of deconversion revenue, up from $0.1 million a year earlier, which introduces uncertainty about how much of the recent revenue beat reflects recurring business versus one-time items. This affects the financial technology and banking-services sectors.
- Analyst target dispersion - Analyst price targets range from $168 to $220, reflecting varying expectations about the company’s outlook and valuation; such dispersion signals continued market uncertainty in software and fintech valuations.
- Guidance sensitivity to deconversion estimates - Management increased the full-year deconversion fee forecast to $28.0 million from $20.0 million, meaning results depend in part on how accurately these one-time items materialize over the remainder of the fiscal year.