JPMorgan Starts Guidewire (GWRE) at Overweight

December 1, 2022 1:39 AM EST
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Price: $72.70 --0%

Rating Summary:
    10 Buy, 7 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 10 | Down: 17 | New: 16
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(Updated - December 1, 2022 5:39 AM EST)

JPMorgan analyst Alexei Gogolev initiates coverage on Guidewire (NYSE: GWRE) with a Overweight rating and a price target of $78.00.

The analyst comments "We view the insurance vertical as one of the most attractive sub-segments in the software sector, with customer relationships between pure-play software providers and insurance carriers often spanning decades. The wave of digital transformation and system modernization is coming down the pike in the Insurance industry, implying an attractive growth runway. Guidewire is the leading provider of critical software systems into the Property and Casualty (P&C) insurance market. GWRE’s applications cover 1) policy administration, 2) claims, 3) billing, 4) digital go-to-market offerings, and 5) analytics designed to help carriers run their respective insurance business. GWRE caters to the part of the insurance market that is less than one-third penetrated, implying a sustainable growth outlook. GWRE has established one of the leading competitive positions, which allows the company to 1) lead the on-premise software integration and 2) successfully transition into the leading provider of cloud solutions to the insurance carriers. The latter allowed GWRE to become the go-to vendor for both new and existing insurance carriers that wish to migrate their operations to the cloud. We estimate that GWRE could potentially more than double its existing revenue by migrating its existing customer base to the cloud. The process of GWRE becoming a successful cloud provider weighed on profitability in 2022 and will likely result in losses hitting a trough in 1H23E. The impact on profitability during the final stages of cloud platform formation makes current and 2023E valuations look elevated compared to what we believe the long-term opportunity in this stock represents."

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

Shares of Guidewire closed at $59.31 yesterday.

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