UPDATE: Goldman Sachs Downgrades Coupa Software (COUP) to Sell
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Goldman Sachs analyst Gabriela Borges downgraded Coupa Software (NASDAQ: COUP) from Neutral to Sell with a price target of $64.00 (from $83.00).
The analyst comments "We downgrade Coupa to Sell from Buy with 1% downside to our updated price target of $64 (from $83, vs. 59% upside for the group). Our Buy thesis had been predicated on a return to more normalized and consistent levels of demand for business spend management (BSM) projects in CY2022 post more muted demand during COVID. While our industry conversations suggest that the pipeline is solid through April, we now believe the risk/reward for the stock is skewed negative over a 12-month time frame: 1) In our view, BSM is maturing as a category, leading to an evolution in go to market and competitive dynamics. We do not forecast a step function change in competition or win rates. However, we do believe the next phase of share gain will be harder to come by - and this has implications for medium-term LTV:CAC. 2) Coupa's success to date with cross-sell has been mixed, with early success with smaller technology-focused deals but limited success with more recent products cycles, particularly in supply chain design and planning, contract management and payments. 3) We expect large transformation projects to move more slowly in a moderating growth environment. We estimate Coupa's average revenue per customer is >$300K, which benchmarks in the top quartile of our Software coverage. While we recognize that we have been wrongly positioned for a significant move in the stock YTD, our updated investment thesis resets valuation based on today's software multiples and is relative to our Emerging Software coverage group."
Shares of Coupa Software closed at $64.51 yesterday.
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