Unisys Banks on License & Support Strength: Will the Momentum Hold?

Unisys Corporation UIS is leaning more heavily on its Licensing and Support (L&S) services, which emerged as a bright spot in the first-quarter 2025 performance. The company expects L&S revenues in 2025 to hit $410 million, up from previous expectations of $390 million.

This upward revision is largely driven by higher consumption patterns and longer-term renewals. Clients are increasingly relying on Unisys’ Clear Path Forward platforms to support AI adoption, data integration and secure workload execution. As enterprises gear up for Windows 11 migrations and AI-enabled transformations, L&S systems are regaining relevance.

Unisys noted that many renewals are not only being executed earlier but are also spanning longer durations, as long as seven years. This points to deepening stickiness, especially among clients doubling down on data reliability and compute efficiency.

This licensing momentum is material given ongoing softness in the ex-L&S portfolio, which includes discretionary project work and services. These segments were impacted by delayed client decisions, particularly within the public sector. With approximately 65% of annual L&S revenues projected for the second half, the back-half weighting is expected to act as a stabilizing factor for full-year revenue and cash flow outlook. Management reiterated its target for approximately $100 million in pre-pension free cash flow in 2025, supported in part by the L&S performance.

UIS’ Price Performance, Valuation and Estimates

Unisys’ shares have gained 2.4% in the past three months compared with the industry’s rise of 3.4%. In the same time frame, other industry players like C3.ai AI, Dynatrace, Inc. DT and Fujitsu Limited FJTSY have gained 5.7%, 13% and 15.8%, respectively.

UIS Three-Month Price Performance

UIS stock is currently trading at a discount. It is currently trading at a forward 12-month price-to-sales (P/S) multiple of 0.15X, well below the industry average of 19.26X, indicating an attractive investment opportunity. Then again, other industry players, such as C3.ai, Dynatrace and Fujitsu Limited have P/S ratios of 6.66X, 8.32X and 1.75X, respectively.

The Zacks Consensus Estimate for Unisys’ 2025 earnings per share has been revised upward, increasing from 25 cents to 58 cents over the past 60 days. This upward trend indicates strong analyst confidence in the stock’s near-term prospects.

The company is likely to report solid earnings, with projections indicating a 28.9% rise in 2025. Conversely, industry players like C3.ai, Dynatrace, and Fujitsu Limited are likely to witness growth of 9.8%, 13.7% and 42.3%, respectively, year over year in 2025 earnings.

UIS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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