Is Thryv (THRY) a Buy for Near-Term Gains Amid Rising Earnings Optimism?

The debate over Thryv Holdings, Inc. (NASDAQ: THRY) has intensified in 2025 as the stock trades near $13.80, with a Zacks Rank #2 (Buy) and a tightening consensus of analyst price targets suggesting a potential 55% rally to $21.40. But is this optimism justified, or does it reflect Wall Street's over-enthusiasm for a company still navigating a complex transformation?

Zacks Rank #2 and Analyst Consensus: A Mixed Signal

Thryv's Zacks Rank #2 is a strong endorsement, rooted in a 116.2% year-over-year increase in current-quarter earnings per share (EPS) estimates and a 26.98% rise in full-year forecasts over the past 30 days. These revisions, driven by one upward adjustment and no downward ones, signal confidence in the company's ability to outperform expectations. The mean price target of $21.40, with a narrow standard deviation of $4.10, further suggests alignment among analysts. However, the 9.4% drop in the consensus price target in Q3 2025—despite these positive trends—raises questions about whether the market is overcorrecting or recalibrating to more realistic expectations.

Fundamental Catalysts: SaaS Growth and EBITDA Momentum

Thryv's recent second-quarter results highlight its strategic shift toward SaaS. SaaS revenue surged 48% year-over-year to $115 million, with a 25% growth in SaaS clients to 106,000. This segment now accounts for 55% of total revenue, up from 40% in 2023, and boasts a 20.3% adjusted EBITDA margin. Meanwhile, the Marketing Services segment, which saw a 35% revenue decline to $95.5 million, is being phased out as the company focuses on higher-margin SaaS offerings.

The company's financials also show progress: net income rose to $13.9 million ($0.31 EPS) in Q2 2025, up from $5.5 million ($0.15 EPS) in the same period in 2024. Adjusted EBITDA hit $51.2 million, with a 24.3% margin, and Thryv raised its full-year 2025 EBITDA guidance, signaling confidence in its long-term trajectory.

Risks and Analyst Skepticism

Despite these positives, analysts have trimmed price targets in response to a Q2 earnings miss. The company reported $0.31 EPS, below the $0.40 estimate, and revenue fell 6% year-over-year to $210.5 million. This led to downward revisions from firms like Needham & Company (from $28 to $20) and RBC Capital (from $17 to $16). While the Zacks Rank remains #2, the drop in price targets reflects lingering concerns about Thryv's ability to sustain growth amid macroeconomic headwinds and sector volatility.

Valuation Divergence: DCF vs. Analyst Targets

A two-stage discounted cash flow (DCF) model estimates Thryv's intrinsic value at $18.73 per share, a 30% discount to the current price of $13.16. However, the analyst consensus of $21.75 implies a 16% premium over this DCF value. This gap suggests either:
1. Aggressive assumptions in analyst models about Thryv's SaaS growth and margin expansion, or
2. Over-optimism about the company's ability to navigate risks like debt servicing (interest payments are not well covered by cash flow) and shareholder dilution.

Upcoming Catalysts to Watch

1. Q3 2025 Earnings Report: With a consensus EPS estimate of $0.25, Thryv must deliver strong results to reverse the downward trend in price targets. A beat could reignite analyst optimism.
2. Earnings Estimate Revisions: Continued upward revisions (as seen in the past 30 days) could push the Zacks Rank to a #1 (Strong Buy), historically linked to strong performance.
3. Institutional Investor Activity: Recent purchases by firms like Millennium Management and GAMMA Investing indicate ongoing confidence, but further outflows could signal caution.

Investment Takeaway

Thryv's Zacks Rank #2 and SaaS momentum make it a compelling case study in the tension between optimism and caution. While the company's financials and strategic pivot to SaaS validate its long-term potential, the recent earnings miss and analyst target reductions highlight near-term risks. Investors should treat the 55% rally as a speculative bet, contingent on Q3 earnings and sustained earnings revisions. For those with a medium-term horizon, Thryv could offer upside if it executes its SaaS transformation, but patience and close monitoring of catalysts are essential.