Morgan Stanley analyst Sanjit Singh maintained a Hold rating on SolarWinds (SWI – Research Report) today and set a price target of $12.00.
Sanjit Singh of Morgan Stanley has given his Hold rating to SolarWinds’s stock due to a combination of factors. In the previous quarter, SolarWinds outperformed expectations in a challenging spending environment, particularly impressive given its significant exposure to the SMB market. This success was largely driven by the company’s transition to a subscription-based model, which saw subscription revenue and ARR grow significantly. The company’s EBITDA also saw healthy growth, resulting in improved margins. This performance suggests that the negative impact of the 2021 SUNBURST attack is largely behind the company.
However, Singh remains cautious in his outlook, given that the company’s guidance for the fourth quarter indicates only 2% growth. This suggests that re-acceleration of growth is dependent on the company’s successful push into Observability, which is still in its early stages. Singh also notes that while the company’s valuation is attractive, a more significant re-rating requires better overall top-line growth to credibly sustain double-digit growth in EPS. As such, while SolarWinds has shown resilience and adaptability, the uncertainty surrounding its future growth trajectory has led Singh to maintain a Hold rating on the stock.
In another report released on October 27, Truist Financial also maintained a Hold rating on the stock with a $11.00 price target.
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Based on the recent corporate insider activity of 44 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of SWI in relation to earlier this year.
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SolarWinds (SWI) Company Description:
SolarWinds Corp. engages in the provision of information technology (IT)infrastructure management software. It provides network management, systems management, database management, IT security, IT helpdesk, and cloud services. The company was founded in 1999 and is headquartered in Austin, TX.
Read More on SWI:
- SolarWinds (NYSE:SWI) & Its Top Executive Face SEC Lawsuit
- SolarWinds, CISO charged by SEC with fraud, internal control failures
- SolarWinds could attract ‘variety of buyers,’ says Truist
- SolarWinds exploring options, including potential sale, Bloomberg says
- SolarWinds management to meet virtually with Truist
