On Monday (NASDAQ:MNDY), Guggenheim shifted its stance on Smartsheet Inc . (NYSE:NYSE:SMAR), downgrading the stock from Buy to Neutral following the closure of the go-shop period in the acquisition agreement with Blackstone (NYSE:BX) and Vista Equity Partners. The firm previously acknowledged the value recognition in Smartsheet in a note titled "SMAR: Value Finally Recognized," dated September 24, 2024.
The downgrade comes as Smartsheet's proxy filing revealed that multiple parties had shown interest in acquiring the company, highlighting its appeal as an asset. Despite the belief that the acquisition at approximately 6.7 times next twelve months (NTM) recurring revenue is fair, there is an expectation that Smartsheet could be valued higher in the future under the new ownership.
Guggenheim's decision to adjust the rating is influenced by the belief that the current buyers, Blackstone and Vista Equity Partners, will enable further value realization for Smartsheet. The firm has also chosen to remove its previous price target of $62 for Smartsheet's stock in light of the recent developments.
The acquisition of Smartsheet has been a focal point for market watchers, as the company's position in the software sector and its potential for growth have made it an attractive target. With the go-shop period now expired, the path is clear for Blackstone and Vista Equity Partners to proceed with the acquisition, barring any unforeseen circumstances.
Investors and stakeholders of Smartsheet will now be looking ahead to see how the acquisition will impact the company's future operations and market position, as well as any potential strategic moves by the new owners to unlock additional value.
In other recent news, Smartsheet Inc. has seen significant developments. The company reported a 17% increase in revenue for Q2 of fiscal year 2025, totaling $276.4 million, and a similar rise in its annualized recurring revenue, reaching $1.093 billion.
In addition to these financial gains, Smartsheet has agreed to an acquisition deal with Blackstone and Vista Equity Partners, a transaction valued at approximately $8.4 billion. This development has led to several changes in stock ratings, with UBS downgrading Smartsheet stock from Buy to Neutral, Canaccord Genuity and JPMorgan adjusting their ratings to align with the acquisition price of $56.50 per share, and RBC Capital raising its price target for Smartsheet to $56.50.
Furthermore, Helen Masters has been appointed as the new Managing Director of the Asia Pacific and Japan region, bringing her extensive tech industry experience to the role.
Lastly, Smartsheet's Chief Operating Officer, Stephen Branstetter, has transitioned to an advisory role as part of the company's recent restructuring. These are recent developments in Smartsheet's ongoing growth and strategic expansion.
InvestingPro Insights
As Smartsheet Inc. (NYSE:SMAR) transitions under new ownership, recent InvestingPro data provides additional context to the acquisition. The company's market capitalization stands at $7.79 billion, reflecting its significant presence in the software sector. Smartsheet's impressive gross profit margin of 81.61% for the last twelve months as of Q2 2025 underscores its operational efficiency, which likely attracted potential buyers during the go-shop period.
InvestingPro Tips highlight that Smartsheet holds more cash than debt on its balance sheet, a factor that may have contributed to its attractiveness as an acquisition target. Additionally, the stock has shown strong performance, trading near its 52-week high with a 39.81% price return over the past six months. These metrics align with Guggenheim's assessment of Smartsheet as a valuable asset in the software industry.
For investors seeking a deeper understanding of Smartsheet's financial position and market performance, InvestingPro offers 12 additional tips, providing a comprehensive analysis to inform investment decisions in light of the recent acquisition news.
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