Analyst James Faucette of Morgan Stanley maintained a Hold rating on Clearwater Analytics Holdings (CWAN – Research Report), with a price target of $19.00.
James Faucette has given his Hold rating due to a combination of factors concerning Clearwater Analytics Holdings’s future revenue growth and product development. Clearwater’s current revenue growth projection for the year 2024 hovers around 18% year-over-year, falling short of its long-term target of over 20%. This gap highlights the need for the company to not only keep up but exceed its historical growth rates. Additionally, the emphasis on improving net revenue retention (NRR) and expanding new product offerings is critical for the company to achieve this reacceleration in growth. With an NRR guidance of 106-108% for the year, there is an expectation, as expressed by CFO Jim Cox, that the NRR will be higher at the year’s end than at the start, which is seen as a positive indicator for the following year’s performance.
Faucette’s evaluation also touches on the gradual development of newer products like JUMP, Prism, LPx, and MLx, which are still in the early stages of contributing to the company’s revenue. Despite some positive signs, such as LPx accounting for about 10% of the new business in the year 2023, the overall contribution from these new offerings is less than 5% of the total company revenue. Moreover, while Clearwater anticipates a 250 basis points increase in adjusted EBITDA margins for 2024, surpassing previous investor day expectations, the focus remains on the company’s ability to significantly enhance NRR and return to its historical revenue growth rates, especially considering the potential to generate further operating leverage in R&D following the company’s recent cloud migration.
See Insiders’ Hot Stocks on TipRanks >>
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
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.
Read More on CWAN:
- Clearwater Analytics downgraded to Neutral from Overweight at JPMorgan
- Clearwater Analytics Announces Fourth Quarter and Full Year 2023 Financial Results
- Clearwater Analytics sees FY24 revenue $431M-$437M, consensus $440.14M
- Clearwater Analytics sees Q1 revenue $100.5M, consensus $101.81M
- Clearwater Analytics reports Q4 non-GAAP EPS 12c, consensus 8c
