Guggenheim Starts Informatica (INFA) at Buy, 'Both the Incumbent and the Disruptor'

(Updated - January 26, 2023 4:20 PM EST)

Guggenheim analyst Howard Ma initiates coverage on Informatica (NYSE: INFA) with a Buy rating and a price target of $24.00.

The analyst comments "We are initiating coverage of Informatica (INFA) with a Buy rating and price target of $24, 40% above the current share price. At an attractive entry point of 4.1x EV/NTM Recurring Revenue and 15.3x EV/NTM FCF, INFA shares offer exposure to a uniquely positioned data management company growing profitably at scale. By enabling the world’s largest and most complex enterprises to connect and transform their data into actionable insights, Informatica has one of the stickiest customer bases within enterprise software and is a market share leader in multiple categories. Under CEO Amit Walia, the company has built upon its core data integration business with significant product and GTM pivots. These include a massive multi-year investment culminating in the 2021 launch of a next-gen Cloud platform and shift to Subscription revenue, which now represents nearly 60% of total revenue, of which almost half is SaaS. Using relatively modest New ARR assumptions, we see Total ARR consistently growing at a 10% to low-teens rate to reach $2.5B in four to five years, while FCF can exceed over 30% in the long-term vs. 20% currently. There is risk of 2023 guidance being below consensus and uncertainty given a CFO transition, but we estimate that due to revenue recognition timing, there could be 6-13% upside to consensus."

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

Shares of Informatica closed at $16.91 yesterday.

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