| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 29.79 | 16 |
| Intrinsic value (DCF) | 6.13 | -76 |
| Graham-Dodd Method | 2.82 | -89 |
| Graham Formula | 8.39 | -67 |
Magic Software Enterprises Ltd. (NASDAQ: MGIC) is a global provider of proprietary application development, business process integration, vertical software solutions, and IT outsourcing services. Headquartered in Or Yehuda, Israel, the company operates in the dynamic Information Technology Services sector, catering to diverse industries with its innovative software platforms like Magic xpa, Magic xpi, and AppBuilder. Magic Software serves healthcare, logistics, broadcasting, and consumer goods sectors with specialized solutions such as Clicks for healthcare providers and Hermes Cargo for air cargo management. With a strong focus on digital transformation, the company enables enterprises to streamline operations through its integration and business intelligence tools like BusinessEye and FactoryEye. Magic Software’s hybrid business model combines software licensing, SaaS offerings, and professional IT services, ensuring recurring revenue streams. Its global footprint and expertise in low-code development position it as a key player in the growing demand for agile enterprise solutions.
Magic Software Enterprises presents a mixed investment profile. The company benefits from recurring revenue streams through software maintenance and IT services, supported by a diversified client base across multiple industries. Its low-code development platforms (Magic xpa, xpi) align with the growing demand for rapid application deployment. However, investors should note its moderate net margins (~6.7%) and exposure to competitive IT outsourcing markets. The stock’s beta near 1.0 suggests market-average volatility, while its dividend yield (~2.5% based on current price) adds income appeal. Risks include currency fluctuations (operating internationally) and reliance on vertical-specific solutions that may face niche competition. The company’s solid cash position ($112.8M) and manageable debt ($86.2M) provide financial flexibility.
Magic Software competes in the fragmented IT services and low-code development market by leveraging its proprietary platforms and vertical expertise. Its Magic xpa/xpi suite differentiates through multi-channel deployment capabilities (web, mobile, desktop) and legacy system integration—key for enterprises modernizing infrastructure. The company’s vertical solutions (e.g., Hermes Cargo, Clicks healthcare) provide domain-specific defensibility against generic platforms. However, it faces pressure from larger low-code vendors like OutSystems and Mendix (Siemens) in broader application development, while IT services compete with global outsourcers like Cognizant. Magic’s hybrid model (software + services) allows cross-selling but may limit scalability compared to pure SaaS players. Its Israel-based R&D delivers cost-efficient innovation, though regional geopolitical risks persist. The company’s ~$550M revenue is modest compared to enterprise software peers, requiring continued niche focus or M&A to expand market share.