The brokerage listed three other factors to help the company retain the momentum in eFiling:
- Following an Ohio court win, momentum continued to build.
- Renewal of four-year contract with Texas for $72 million.
- RFP system throughout Michigan State.
Pacific Crest sees an upward bias to its outlook for the year 2017 based on the court ruling and growing contribution following the implementations in six states. As a result, the analyst lifted his EPS estimates from $3.90 on revenue of $872.3 million to $3.94 on $875.9 million revenue for the year 2017.
In a research note, the brokerage said, "The transaction-based pricing component of eFiling yields very high incremental margins as installations move into go-mandatory status. After taking into account costs for ramping up new customers, we conservatively estimate eFiling at scale can generate ~50 percent operating margin. This equates to every $10 million of incremental eFiling revenue adding $0.08 to EPS."
The analyst argues in favor of premium based on big chance to modernize the local government and replace the aging systems within the $13 billion TAM. Upton sees Tyler as a company on track to cross $1 billion revenue mark in the upcoming period.
At time of writing, Tyler Tech was down 0.29 percent at $169.02.
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