Goldman Sachs Upgrades Demandware (DWRE) to Buy

Goldman Sachs upgraded Demandware (NYSE: DWRE) from Neutral to Buy with a price target of $70.00. Analyst Greg Dunham sees strength in the second half of the year.

"We are upgrading DWRE to Buy from Neutral as we see 28% upside to our new $70, 12-month price target. We see the sell-off post 2Q results, with shares down 12% (versus peers being flat and the Russell 2000 +1%) in reaction to new bookings in the quarter falling short of the company’s plan, as overdone," said Dunham.

"We see current levels (7.7x 2015 EV/Sales versus the group at 6.0x despite 50% higher growth) as an opportunity to buy one of the most differentiated SaaS offerings with strong visibility to 40% plus revenue growth the next three years. We see upside to consensus (we model 6% above street revenue estimates in 2015) and a return of strong bookings growth improving sentiment over the next year. We would take advantage of the year-to-date gap between stock performance (i.e., NTM EV/Sales multiple down ~36%) and results (i.e., subscription revenue +57%, live customers +40%, and sales commissions +44%)," he added.

For an analyst ratings summary and ratings history on Demandware click here. For more ratings news on Demandware click here.

Shares of Demandware closed at $54.64 yesterday.

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