Freedom experts raise IDT target price to $85 after record results

 Freedom Broker analysts maintained their “Buy” rating on shares of IDT Corporation (IDT), a provider of financial and communications services, and raised the target price from $75 to $85. At the current price of $79.97, this implies upside potential of 6.29%. Record fourth fiscal quarter results and the company’s outlook for next year confirm the sustainability of earnings growth, the experts believe. 

What kind of company is IDT

IDT Corporation is a U.S. telecommunications and fintech company. IDT develops four business lines: National Retail Solutions (NRS) offers small stores POS systems, payment acceptance, software services, and advertising solutions. The fintech segment includes BOSS Money international remittances. net2phone provides cloud telephony and customer engagement services, including AI-based offerings. The traditional communications business generates cash flow to fund the development of the other segments. 

More profitable segments are changing the business mix

Freedom Broker experts highlight the key point: the growing contribution of NRS, fintech, and net2phone to IDT’s earnings. In fiscal 2026, these segments accounted for 53% of adjusted segment EBITDA excluding corporate overhead, up from 46% a year earlier. At the same time, they represent only about a third of total revenue.

Growth is being driven by higher revenue from existing customers: stores add additional NRS services, BOSS Money users switch to digital transfers, and net2phone clients purchase new AI-based solutions. This business mix supports margins and makes it possible to fund growth using cash flows from traditional communications services, analysts explain.

Operating profit rose 52%

IDT’s quarterly revenue increased 7% year over year to $339 million. Gross profit rose 18% to a record $134.8 million, while gross margin expanded by 3.6 percentage points to 39.8%. Operating profit climbed 52% to $33.2 million. Net income attributable to IDT increased 29% to $21.7 million. GAAP EPS was $0.87 versus $0.67 a year earlier; adjusted EPS was $0.94 versus $0.76. Adjusted EBITDA grew 22% to $41.2 million.

Revenue exceeded Freedom Broker’s forecast by 6%, gross profit by about 9%, and adjusted EBITDA by 10%. Adjusted EPS came in 4% below the expected $0.98. The reason was higher tax accruals and a larger share of profit attributable to minority shareholders of subsidiaries, rather than weaker operating performance.

For the full fiscal year, revenue grew 5% to $1.298 billion, operating profit rose 21% to $121.2 million, and net income increased 14% to $86.6 million. Adjusted EBITDA climbed 17% to $154.6 million, beating management’s updated guidance of $150–152 million.

NRS earns more from the existing network

The most significant beat versus expectations was delivered by the National Retail Solutions division. Quarterly segment revenue rose 31% to $45 million, operating profit surged 105% to $12 million, and adjusted EBITDA increased 47% to $14 million. Revenue from store services and other offerings grew 31% to $28.5 million. Advertising and data revenue rebounded after weakness in prior quarters and rose 49% to $10.1 million.

The number of active POS terminals reached 40.4 thousand and was essentially in line with Freedom’s forecast. Therefore, the result was driven primarily by higher revenue per retail location, rather than faster network expansion. Average monthly gross profit per location increased 22% to $383.

NRS gross margin reached 94.8%, but it was affected by a one-time duty refund. Management considers the annual level of around 92% to be more indicative. Therefore, the quarterly margin should not be automatically extrapolated to future periods.

Digital transfers support BOSS Money profitability

Fintech segment revenue grew 12% to $47.1 million, while adjusted EBITDA rose 17% to $6.5 million. Gross margin increased by 6.5 percentage points to 65.6%. The number of BOSS Money transfers increased 14% to 7.5 million. Digital transactions grew 20%, while transfers through the retail network fell 20%. The digital channel accounted for 88% of all transactions.

According to Freedom Broker’s assessment, the next stage of profit growth will be more closely tied to efficiency gains. Automating transaction verification, fraud prevention, and other processes using AI makes it possible to increase transfer volumes without a comparable rise in expenses. As a result, segment profit may grow faster than revenue.

net2phone will allocate part of its profit to AI development

net2phone’s quarterly revenue increased 9% to $24.9 million, including $24.5 million in subscription revenue—10% higher than a year earlier. Operating profit rose 75% to $2.6 million, and adjusted EBITDA increased 26% to $4.4 million.

Management expects net2phone’s annual recurring revenue to exceed $100 million in the first quarter of fiscal 2027. Demand is supported by contact-center solutions and new AI tools.

At the same time, a significant portion of the additional profit was reinvested in AI-based products and their promotion. This may limit near-term EBITDA growth, although it lays the groundwork for further business expansion.

Traditional communications services also proved resilient: quarterly revenue grew 2% to $222 million, and adjusted EBITDA rose 12% to $19.9 million. Over the year, segment EBITDA increased 1% despite a 4% decline in gross profit. The result was supported by a nearly 6% reduction in selling, general, and administrative expenses.

The company’s outlook implies further growth

For fiscal 2027, IDT forecasts gross profit in the range of $545–555 million and adjusted EBITDA of $176–180 million. The midpoints imply growth of about 11% and 15%, respectively. The company expects an increased EBITDA contribution from each operating segment.

Freedom Broker maintains more conservative estimates: revenue of $1.329 billion, gross profit of $540 million, and adjusted EBITDA of about $160 million. The adjusted EPS forecast is $4.22.

Key risks remain tighter U.S. immigration policy, changes in remittance regulation, competition in NRS, and a faster decline in the traditional communications business. Higher AI spending or slow adoption of new products could delay net2phone profit growth.

In June, after IDT Corporation reported results for the third quarter of fiscal 2026, Freedom analysts maintained their “Buy” rating but lowered the target price from $80 to $75 due to more restrained expectations for NRS network expansion. The company’s revenue grew 5% year over year to $315.7 million, and adjusted EPS was $0.94.

The main driver was the fintech segment: its revenue increased 17% to $45 million as customers shifted to BOSS Money digital transfers. Strong results allowed management to raise its full-year adjusted EBITDA guidance from $148 million to $151 million. IDT’s balance sheet held $251 million in cash with no debt; the company continued to repurchase shares and pay dividends.

Not an individual investment recommendation.