Coupa Software (COUP) Organic Growth Appears to be Slowing, JPMorgan Reiterates Underweight
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JPMorgan analyst Mark Murphy reiterated an Underweight rating and $125.00 price target on Coupa Software (NASDAQ: COUP) after the company reported revenue growth of 47% in FQ4, 16 points higher than consensus but fueled by acquisitions. Looking at organic growth, the analyst believes this metric dipped into the low 20s, down slightly and suggesting a disconnect with current valuation. Coupa had guided to a $13M contribution from the $1.5B Llamasoft acquisition for FQ4, but Llamasoft outperformed guidance by $9M, contributing 8 points of growth outperformance.
The analyst stated "We think guidance remains overly conservative and the company will likely continuing along its arc of outperformance from acquired assets: (a) Revenue guidance in Q1 suggests a sequential decline of 7%, which compares to sequential Q1 increases of 5%, 9%, and 7% the last three FQ1’s; (b) Coupa isn’t projecting any revenue or billings contribution from Coupa Travel Saver, so should business travel return at any point in FY22 then Coupa could see a revenue contribution; and (c) Coupa announced another acquisition (Pana), a corporate travel booking company, which is likely to generate revenue. We remain positive on the brand Coupa has built and the value it drives to customers. However, it is logical to conclude that inorganic contributions are meaningful contributors to growth, and paying a high-20s FTM revenue multiple for organic growth in the 20s seems stretched, in our view."
Our Dec 2021 price target of $125 is based on ~12.5x EV/CY22E revenue.
Shares of Coupa Software closed at $275.00 yesterday.
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