FORTY

Rating neutralAI Memo

Formula (1985)

As of 2026-08-13/Confidence low

Open ticker Back to Memos

Data freshness

AI Memo

As of 2026-08-13 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

neutral

Confidence

low

Horizon

—

Key catalyst

Matrix–Magic integration execution • 2026-11-11

Base target: $108 / p=50% prob

Biggest risk

Reported profitability benefited from a non-recurring TSG capital gain, while integration execution and future cash deployment remain uncertain. The stored secondary valuation context flags recent price weakness, a premium P/E, and lower net-margin and earnings trends; no analyst revision signal is available.

Invalidation

Break below $85 or thesis failure.

What would change my mind?

The company-reported Q1 print showed strong revenue and operating growth, including 31.7% operating-income growth and 60.5% adjusted continuing-operations net-income growth after excluding the TSG-related gain. Matrix–Magic consolidation and substantial cash resources provide potential operating and capital-allocation support.

Research note

Recommendation

neutral

Confidence

low

As of

2026-08-13

Base target

$108

p=50%

Bull target

$123

p=15%

Bear target

$85

p=35%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Recurring earnings quality
Post-Sapiens capital allocation
The company-reported Q1 print showed strong revenue and operating growth, including 31.7% operating-income growth and 60.5% adjusted continuing-operations net-income growth after excluding the TSG-related gain.

BearKey bullets

Future use of the approximately $1.18 billion cash balance is uncertain.
Matrix–Magic integration may not deliver sustained revenue or margin benefits.
No company forward guidance, analyst estimate revisions, target changes, or rating changes are available in the packet.

WatchKey bullets

Matrix–Magic integration execution

Summary

High-level snapshot

Recommendation

neutral

Model confidence

low

Timeframe

Asset

Equity

Trigger

Base case: $108 (p=50%)

Target spread vs base: +14% / -21%

Scenario probabilities

Bull Target: $123 (p=15%)Base Target: $108 (p=50%)Bear Target: $85 (p=35%)

Commentary

The primary Q1 release supports a positive operating signal, but the evidence packet contains no recent news, social coverage, options data, short-interest data, employee score, analyst reaction, or estimate revisions. The only valuation discussion is secondary, so the thesis remains a cautious monitoring view with low evidence quality.

As of 2026-08-13 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Recurring earnings quality
Post-Sapiens capital allocation

Scenarios

Bull Target (Scenario probability)

$123 / p=15% prob

Base Target (Scenario probability)

$108 / p=50% prob

Bear Target (Scenario probability)

$85 / p=35% prob

Analysis 2026-08-13 · RankAlpha Sentiment Codex

Analysis reference price unavailable. Targets are shown without scenario returns.

Sentiment & Exposure

News Sentiment (30d)

0.00

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-11-11
Matrix–Magic integration execution
Matrix completed its acquisition of Magic Software in February 2026, making Magic a wholly owned subsidiary. Subsequent revenue and margin performance could strengthen the thesis, but no formal integration targets or forward guidance are available [#PR-2026-05-28] [#SEC-6K-2026-05-28].
Prob 50.00% • Move 6.00% • Priced-in 35.00%

Short-term Catalysts

Next few weeks

Recurring earnings quality
2026-11-11
Q1 2026 revenue rose 19.2% year over year to $738.3 million. Operating income rose 31.7% excluding a $16.8 million TSG-related capital gain, while adjusted continuing-operations net income rose 60.5%. Future results must confirm that the improvement is recurring rather than transaction-driven [#PR-2026-05-28] [#SEC-6K-2026-05-28].
Prob 60% • Move 5% • Priced-in 45%

Long-term Catalysts

Months to a year

Post-Sapiens capital allocation
2027-08-13
Formula paid a special dividend of $13.045 per share after the Sapiens transaction and held approximately $1.18 billion in cash and short-term deposits at March 31, 2026. Future reinvestment or distributions could support value, but deployment plans are not established.
Prob 40% • Move 8% • Priced-in 30%

Risks

Future use of the approximately $1.18 billion cash balance is uncertain.
Matrix–Magic integration may not deliver sustained revenue or margin benefits.
No company forward guidance, analyst estimate revisions, target changes, or rating changes are available in the packet.
Q1 operating income and net income included a material TSG-related capital gain, creating earnings-quality risk.
The secondary valuation context indicates a premium multiple despite recent earnings and margin pressure.

Peers

Symbol	Summary
BL	Same-sector market-cap proxy, but not a close operating comparable for Formula's diversified IT holding-company structure.
CXM	Software-sector reference with limited demonstrated comparability to Formula's multi-subsidiary portfolio.
GLOB	Broad software and IT-services proxy; useful for sector context only, not a confirmed direct peer.
PGY	Same-sector market-cap proxy with weak demonstrated business comparability.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-08-13

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Symbol

Summary

Same-sector market-cap proxy, but not a close operating comparable for Formula's diversified IT holding-company structure.

CXM

Software-sector reference with limited demonstrated comparability to Formula's multi-subsidiary portfolio.

GLOB

Broad software and IT-services proxy; useful for sector context only, not a confirmed direct peer.

PGY

Same-sector market-cap proxy with weak demonstrated business comparability.