Formula Systems (1985) Ltd ADR Dossier - Source-backed chat

Formula Systems (1985) Ltd ADR

FORTYNASDAQ

SectorInformation Technology

IndustryInformation Technology Services

Beta (adjusted)1.11

Intrinsic Value $173.74median of 4 methods · middle span $170-$177based on filings through 31 Dec 2025

Market Price $114.99Price as of 25 Sep 2026

Significantly undervaluedIntrinsic value is 51% above the market price

−50% · IV below pricenear fair value ±15%IV above price · +50%

marker beyond scale (+51%)

Data confidence Sign in to view data confidence

Market Cap $1.8B

Enterprise Value $1.1B

Shares Outstanding 15.3M diluted

Next Earnings Date19 Nov 2026

Last ex-dividend22 May 2026

All prices and values are periodic snapshots, not live quotes. Source dates are shown for reference.

Thesis

Street consensus, scenarios, merits, risks, and invalidation triggers

AI-assisted

Thesis Summary

Formula Systems (1985) Ltd. represents a highly resilient global IT holding group with a strong footprint in software consulting, cybersecurity, cloud, and AI solutions. The company's investment appeal is anchored by its robust balance sheet, highlighted by $1.18 billion in cash and short-term deposits as of Q1 2026, and its strategic agility, demonstrated by the successful monetization of Sapiens and the consolidation of Magic Software under Matrix IT. Despite geopolitical headwinds in its primary operating base of Israel, Formula continues to deliver record-breaking operational results and return substantial capital to shareholders, as evidenced by the $200 million special dividend paid in June 2026.

This section is the 12-month view: analyst targets and the probability-weighted scenarios built from them. The intrinsic value at the top of this page answers a different question: what the business is worth today.

Our research · scenarios, merits, risks, and invalidation triggersResearch as of 18 Sep 2026

Scenarios · 12-month scenario targetsAnchored at research date

Bear CaseDownside scenario

$95.0020%

Prolonged or escalating geopolitical conflict in Israel leads to severe workforce disruptions, currency volatility, and delayed government payments. Integration friction from the Matrix-Magic merger limits margin expansion, and a slowdown in global IT spending dampens subsidiary performance.

Base CaseCentral scenario

$135.0050%

Formula maintains steady mid-to-high single-digit revenue growth, supported by strong demand from the Israeli defense sector and steady IT consulting needs. The integration of Magic Software under Matrix IT yields expected operational synergies, and the company continues its consistent dividend distribution policy.

Bull CaseUpside scenario

$160.0030%

Accelerated adoption of enterprise-scale AI infrastructure and cybersecurity solutions drives double-digit organic growth across Matrix IT and TSG. The group successfully deploys its massive cash reserves into highly accretive acquisitions in payroll, HR, and defense tech, while geopolitical tensions in the region ease, leading to a significant multiple expansion.

Scenarios reflect our research view at the research date.

Key Investment Merits

Exceptional balance sheet strength with $1.18 billion in cash and short-term deposits as of March 31, 2026.
Strong shareholder alignment and capital return, highlighted by a $200 million special dividend paid in June 2026.
Resilient portfolio exposure to high-demand sectors including cybersecurity, cloud, defense tech, and AI solutions.
Proven track record of value creation through active portfolio management and strategic M&A (e.g., Sapiens transaction with Advent).

Key Investment Risks

Significant geographic concentration and operational exposure to geopolitical instability and conflict in Israel.
Integration risks associated with the large-scale merger of Matrix IT and Magic Software Enterprises.
Dependence on key executive leadership, particularly CEO Guy Bernstein, to drive the group's long-term investment strategy.

Thesis Invalidation Triggers

A severe escalation in regional conflict that halts operations at major Israeli delivery centers for an extended period.
A material weakness or failure in internal controls over financial reporting that undermines financial statement reliability.
A significant decline in Matrix IT's operating margins below historical averages, indicating failure to realize merger synergies.

All scenarios are estimates and subject to change. Past performance is not indicative of future results.

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Explore this dossier

ValuationIntrinsic value, the six-method breakdown, peer medians, and your assumptions sandbox.Financial SnapshotRevenue, profitability, returns, balance sheet, dividends, and the filing-level detail.Qualitative AnalysisBusiness overview, strategic initiatives, and mergers, acquisitions & partnerships.Outlook & Key DatesForward estimates, reporting calendar, and the monitoring framework.