On Tuesday, KeyBanc Capital Markets reaffirmed its positive stance on ServiceTitan, maintaining an Overweight rating.
The reaffirmation comes after ServiceTitan, a software-as-a-service (SaaS) provider for the trades, released strong financial results in its first quarter as a publicly traded entity on NASDAQ:TTAN.
The analysts at KeyBanc expressed optimism about ServiceTitan's market potential and growth catalysts, particularly noting an unexpected acceleration in the company's fiscal third quarter (F3Q) and a significant increase in its fiscal fourth quarter (F4Q) guidance.
Setting a $120.00 price target for the company's stock the firm noted that the company's preliminary F3Q results, which were disclosed during its initial public offering, had already set high expectations, yet the actual results and outlook surpassed those anticipations.
ServiceTitan's guidance for F4Q revenue is between $199 million and $201 million, which represents a 23.6% year-over-year growth at the midpoint and exceeds the consensus estimate of $193.9 million.
Additionally, the company's operating margin (OM) guidance is slightly above both KeyBanc's and the Street's forecasts at 2.9%. With the close of F4Q just three weeks away, the guidance is presumed to be well-informed, and there is potential for further growth, especially if the company continues to see momentum in its Pro product attach rates.
KeyBanc also indicated a high conviction in ServiceTitan's prospects for the year 2025, adjusting its fiscal year 2025 and 2026 estimates upwards to reflect the robust F3Q performance and the company's revised outlook. ServiceTitan's substantial market opportunity, coupled with its long-term growth and margin potential, supports KeyBanc's recommendation that the stock should be a fundamental holding for SaaS investors.
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