On Tuesday, Baird increased its price target on shares of Guidewire (NYSE:GWRE) to $204 from the previous target of $175. The firm has maintained its Outperform rating on the stock.
The adjustment follows Guidewire's recent performance, which has shown substantial growth in fully-ramped Annual Recurring Revenue (ARR) and Free Cash Flow (FCF) over the past two years.
The upcoming Investor Day on Thursday is expected to be particularly significant, with the market anticipating positive revisions to the company's mid-term targets. The analyst from Baird believes that while high expectations could lead to a "sell-the-news" response, the presence of certain upside factors may continue to drive the stock's performance positively.
In their commentary, the analyst highlighted the company's solid financial trajectory and the potential for stock gains. They mentioned that based on a "raised base case" framework, an approximate 10-15% annualized return potential for Guidewire's stock could be envisioned.
In other recent news, Goldman Sachs reiterated its Buy rating on Guidewire, maintaining a price target of $182.00, while Oppenheimer raised its price target to $200 from $185. Additionally, JPMorgan increased its price target to $210, and Stifel elevated its target to $200, all citing the company's cloud platform success and anticipated growth.
Guidewire's fiscal 2025 guidance projects a milestone of $1 billion in Annual Recurring Revenue (ARR) and a total revenue expected to be between $1.135 billion and $1.149 billion. These projections, driven by the company's successful cloud platform, have led to the company's expectation of becoming GAAP profitable in fiscal year 2025.
Recent developments also include the expansion of Guidewire's board of directors with the appointment of Mark Anquillare, former President and COO of Verisk Analytics (NASDAQ:VRSK). However, the company was also involved in a hacking incident where a British individual, Robert Westbrook, was arrested on charges of hacking into several companies, including Guidewire, for insider trading information.
InvestingPro Insights
Guidewire's recent performance and Baird's optimistic outlook are further supported by real-time data and insights from InvestingPro. The company's market capitalization stands at $15.12 billion, reflecting its significant presence in the software industry. Guidewire has demonstrated impressive growth, with a 99.18% price total return over the past year and a robust 67.07% return year-to-date.
InvestingPro Tips highlight that 13 analysts have revised their earnings upwards for the upcoming period, aligning with Baird's positive stance. This optimism is further reinforced by the expectation that Guidewire will be profitable this year, despite not being profitable over the last twelve months. The company's strong financial trajectory is evident in its revenue growth of 8.3% in the last twelve months, with Q4 2024 showing a 7.99% quarterly increase.
While Guidewire's stock is trading near its 52-week high, with the price at 98.49% of its peak, investors should note that it's trading at a high revenue valuation multiple. This valuation could be justified by the company's growth prospects and the anticipated positive revisions to mid-term targets at the upcoming Investor Day.
For those seeking a deeper analysis, InvestingPro offers 11 additional tips on Guidewire, providing a comprehensive view of the company's financial health and market position.
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