FORTY

Rating neutralAI Memo

Formula (1985)

As of 2026-06-11/Confidence low

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Data freshness

AI Memo

As of 2026-06-11 • Model: RankAlpha Sentiment Codex

Decision Panel

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

Action

neutral

Confidence

low

Horizon

—

Key catalyst

Second-quarter results are the next clean checkpoint on post-merger run-rate at Matrix/Magic • 2026-08-31

Expected move: +3%

Biggest risk

The bear case is that comparability remains messy after the Sapiens sale, reported Q1 strength was helped by a one-time TSG-related capital gain, and Formula is now more dependent on execution across a portfolio of subsidiaries rather than a simpler consolidated software story. That complexity can keep valuation restrained even if operating trends remain decent [#PR-2026-05-28] [#SEC-20F-2026].

Invalidation

Break below $102 or thesis failure.

What would change my mind?

Primary company evidence improved materially after confirming the Q1 2026 release and FY2025 Form 20-F. The bull case is that Formula is entering 2026 with strong subsidiary execution, record first-quarter revenue and earnings, substantial liquidity, and favorable demand in cloud, cybersecurity, data, AI, and defense-linked activities, while the Matrix-Magic combination broadens scale and international reach [#PR-2026-05-28] [#SEC-20F-2026].

Research note

Recommendation

neutral

Confidence

low

As of

2026-06-11

Base target

$121

p=45%

Bull target

$132

p=25%

Bear target

$102

p=30%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Q1 earnings quality may be digested more conservatively after stripping out one-time TSG gains
Core subsidiary execution must replace the lost Sapiens consolidation story
Primary company evidence improved materially after confirming the Q1 2026 release and FY2025 Form 20-F.

BearKey bullets

Execution risk remains around integrating Matrix and Magic and sustaining the current demand backdrop in cloud, AI, cybersecurity, and defense-related activities [#PR-2026-05-28].
Formula paid a roughly $200 million special cash dividend in June 2026, which is shareholder-friendly but reduces excess cash available for future deployment [#PR-2026-05-28].
Peer support is weak because the supplied software names are only loose comparators for a diversified holding-company structure, limiting confidence in multiple-based upside claims.

WatchKey bullets

Second-quarter results are the next clean checkpoint on post-merger run-rate at Matrix/Magic

Summary

High-level snapshot

Recommendation

neutral

Model confidence

low

Timeframe

Asset

Equity

Trigger

Base case: $121 (p=45%)

Bull/Bear spread: +12% / -13%

Vs latest close: Bull +12% · Base +3% · Bear -13%

Scenario probabilities

Bull Target: $132 (p=25%)Base Target: $121 (p=45%)Bear Target: $102 (p=30%)

Commentary

Deterministic signals lean slightly positive, but evidence quality remains very low and catalyst density is still thin. Primary-source confidence improved after confirming company materials, yet the packet still lacks trusted-news follow-through, analyst revision data, and usable social coverage, so this remains a cautious monitoring view rather than a strong software rerating thesis.

As of 2026-06-11 • 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

Q1 earnings quality may be digested more conservatively after stripping out one-time TSG gains
Core subsidiary execution must replace the lost Sapiens consolidation story

Scenarios

Bull Target (Scenario probability)

$132 / p=25% prob

Base Target (Scenario probability)

$121 / p=45% prob

Bear Target (Scenario probability)

$102 / p=30% prob

Price $118 as of 2026-06-10

Nearest Scenario: Base (∆ 3%)

Targets vs latest close: Bull +12% · Base +3% · Bear -13%

Sentiment & Exposure

News Sentiment (30d)

0.00

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-08-31
Second-quarter results are the next clean checkpoint on post-merger run-rate at Matrix/Magic
Formula's 2025 Form 20-F says the Matrix-Magic merger closed on February 24, 2026 and had no impact on the 2025 consolidated statements, while the Q1 release said Matrix saw strong demand in IT services, cybersecurity, cloud, data, AI, and defense-related activities. The next quarterly report should give a cleaner read on whether those post-merger margin and demand trends are sustainable [#SEC-20F-2026] [#PR-2026-05-28].
Prob 65.00% • Move 8.00% • Priced-in 45.00%

Short-term Catalysts

Next few weeks

Q1 earnings quality may be digested more conservatively after stripping out one-time TSG gains
2026-08-31
Formula's first-quarter release showed record revenue, operating income, and net income, but also disclosed that reported operating income included a $16.8 million capital gain tied to TSG's January 2026 private placement and employee stock-compensation exercise; excluding that gain, operating income still rose 31.7% year over year and continued-operations net income rose 60.5%, which is strong but less dramatic than the headline figures [#PR-2026-05-28].
Prob 70% • Move -6% • Priced-in 60%

Long-term Catalysts

Months to a year

Core subsidiary execution must replace the lost Sapiens consolidation story
2026-12-31
Formula's 2025 Form 20-F says Sapiens ceased to be a controlled subsidiary after the December 17, 2025 Advent transaction, with Formula retaining only an indirect 18.68% interest through SI Swan. Longer-term upside now depends on Matrix, Michpal, TSG, and other core holdings sustaining profitable growth without relying on transaction optics or discontinued-operations noise [#SEC-20F-2026].
Prob 45% • Move 14% • Priced-in 35%

Risks

Execution risk remains around integrating Matrix and Magic and sustaining the current demand backdrop in cloud, AI, cybersecurity, and defense-related activities [#PR-2026-05-28].
Formula paid a roughly $200 million special cash dividend in June 2026, which is shareholder-friendly but reduces excess cash available for future deployment [#PR-2026-05-28].
Peer support is weak because the supplied software names are only loose comparators for a diversified holding-company structure, limiting confidence in multiple-based upside claims.
Post-Sapiens deconsolidation reduces historical comparability and makes continuing-operations quality harder to judge from simple headline growth rates [#SEC-20F-2026].
Reported Q1 2026 profitability was partly boosted by a $16.8 million TSG-related capital gain rather than purely recurring operating performance [#PR-2026-05-28].

Peers

Symbol	Summary
APPN	Only a loose enterprise-software workflow comparator from the supplied peer list; useful for broad software sentiment, but not a direct match for Formula's holding-company structure and subsidiary mix.
INTA	Another loose software platform peer that can help frame mid-cap software multiples, but it does not solve the lack of a clean operating comp for Formula after the Sapiens deconsolidation and Matrix-Magic combination.
NCNO	Relevant mainly as a recurring-software sentiment reference; its simpler operating model reinforces that peer-based valuation conclusions for Formula should remain low-conviction.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-06-11

AI Stock Memo: FORTY - Formula (1985) - RankAlpha