Rosenblatt Starts Hortonworks (HDP) at Buy, Sees 100%+ Upside
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Rosenblatt initiates coverage on Hortonworks (NASDAQ: HDP) with a Buy rating and a price target of $20.00, suggesting more than 100% upside from current levels. The bullish rating comes following the recent sell-off on weak Q2 earnings.
Analyst Marshall Senk commented, "Hortonworks is uniquely positioned to ride two of the most significant waves in the tech sector today - big data/analytics and the migration to open source. Hortonwork's core Hadoop offering is still in the very early stages of customer adoption, with industry analysts forecasting growth of nearly 50% for the next several years. While the company's subscription model impairs GAAP earnings, growth in both OCF and EBITDA points to a strong path to profitability."
"We view last week’s selloff following disappointing Q2 earnings as a severe over reaction, given our perspective that results were hurt by issues impacting sales execution that have been addressed. We choose to look at the positive factors, particularly the 72% subscription growth as a sign the company is on the right near and long term path. We are very comfortable with our forecast of adjusted EBITDA breakeven in Q4 and positive OCF in the third quarter of 2017, reinforcing our view that cash will not be an issue for the company. With the stock now trading at less than 2x this years’ revenues, growing 60% and showing sequentially improving margins, we believe now is the time to build positions in Hortonworks."
Shares of Hortonworks closed at $9.84 yesterday.
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