UPDATE: JPMorgan Downgrades SolarWinds (SWI) to Neutral

December 14, 2021 4:16 AM EST
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Price: $8.79 -4.04%

Rating Summary:
    9 Buy, 19 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 2 | Down: 23 | New: 24
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(Updated - December 14, 2021 4:55 AM EST)

JPMorgan analyst Sterling Auty downgraded SolarWinds (NYSE: SWI) from Overweight to Neutral with a price target of $16.00 (from $23.00).

The analyst comments "SolarWinds is a Network and Infrastructure Management company that offers on premise, private cloud and public cloud solutions to organizations of all sizes. Digital transformations have put software front and center for companies, increasing the importance of the solutions that monitor and ensure that the software is running efficiently and effectively. SWI is shifting its product portfolio towards observability. Taken together, SolarWinds estimates this is a $60B market opportunity by 2025. SWI distinguishes itself from other software vendors through its low-cost, easy-to-use solutions that require no professional services. The inside sales motion allows SWI to have some of the best margins in the software space. SWI is working its way back from the December 2020 breach, and renewal rates have outperformed our expectations in 2021. But now that the MSP business has been successfully spun off, we see SWI as a mid-single-digit grower with some margin expansion. Looking at our new DCF analysis, we think that leads to a low double-digit cash flow grower that over the 10-year horizon will decelerate to high single digits. That points to a price target of $16 and a return more commensurate with our overall coverage. Hence, we are downgrading SolarWinds to N with Dec-22 PT of $16 (down from $23)."

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

Shares of SolarWinds closed at $14.52 yesterday.

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