Valhi (VHI) Stock Forecast & Price Target

Valhi Inc. is expected to experience significant financial growth, with projected EBITDA increasing at a 37% compound annual growth rate (CAGR), rising from $25 million in FY25 to $47 million by FY27, alongside an expansion in EBITDA margin from 24.2% to 30.1%. The company is also forecasted to achieve a 23% increase in Earnings Per Share (EPS) over the next 12 months, outperforming Canadian software consolidator peers, which are projected to see EPS growth of only 12% and 13%. With a strong revenue base driven primarily by its Chemicals segment and the robust demand for value-added titanium dioxide pigments, Valhi's diversified operations across chemicals, component products, and real estate management position it favorably for sustained financial performance.

Valhi Inc. faces a challenging financial outlook primarily due to significant revenue declines in its Attend Anywhere segment, which has experienced a 57% drop over the past two years, leaving it with only £5.0 million in revenue for FY25 amid pricing pressures from the NHS and increased competition from platforms like Microsoft Teams. Additionally, NHS productivity remains substantially below pre-pandemic levels, with estimates indicating that it was 11% lower in 2023/2024 than in 2019/2020, negatively impacting demand for health-related services and products. Furthermore, the company's EBITDA margin is projected to decrease from 26.4% in Q2/FY25 to a low of 21.5% in Q3/FY25 while recovery to 25% over the next year remains uncertain, suggesting potential instability in profit margins.