Clearwater Analytics Holdings (CWAN – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Alexei Gogolev from J.P. Morgan downgraded the rating on the stock to a Hold and gave it a $22.00 price target.
Alexei Gogolev has given his Hold rating due to a combination of factors including the delayed re-acceleration of growth until 2025 and a more pronounced decline in net new Annual Recurring Revenue (ARR). Despite meeting prior quarter earnings expectations, Clearwater Analytics Holdings (CWAN) provided a revenue growth forecast for FY24 that falls short of the industry consensus. The company is also facing heightened price competition that is expected to continue through the next year, impacting its trajectory toward its long-term target net revenue retention (NRR) rate of 115%.
Bright spots in CWAN’s performance, such as a stronger than expected EBITDA margin and high client retention rates, suggest underlying strengths. However, the disappointing outlook for FY24, the underperformance of the Jump division post-acquisition, and a decline in net new ARR and NRR overshadow these positive aspects. Additionally, while there are hopeful signs of future revenue contribution from a multi-product strategy, the tangible effects of these initiatives are not anticipated until 2025. This combination of short-term challenges and delayed benefits has informed Gogolev’s decision to maintain a Neutral stance relative to other software coverage.
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Clearwater Analytics Holdings (CWAN) Company Description:
Clearwater Analytics Holdings Inc provides investment accounting and reporting, performance measurement, compliance monitoring, and risk analytics solutions for asset managers, insurance companies, and large corporations. Its cloud-native software allows clients to radically simplify their investment accounting operations, enabling them to focus on higher-value business functions such as asset allocation strategy and investment selection.
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