Guidewire (GWRE) PT Raised to $270 at Goldman Sachs
Goldman Sachs analyst Adam Hotchkiss raised the price target on Guidewire (NYSE: GWRE) to $270.00 (from $235.00) while maintaining a Buy rating.
The analyst comments "We reiterate our Buy-rating on GWRE (indicated +11% after hours) after the company reported the most significant quarterly ARR beat of the last five years alongside revenue, operating income, and FCF outperformance. Guidewire's 17 cloud deals more than doubled F3Q levels in each of the last four years, with outperformance broad-based across Insurer sizes (7 Tier 1 deals), deal types (9 migrations, 5 net new logo deals, 3 expansions), and products (14 InsuranceSuite for one or more applications, 3 InsuranceNow). The breadth of outperformance was reflected in updated guidance for ~40% yoy growth in FY25 net new ARR. Other highlights from the quarter included: 1) Record low ARR attrition coupled with record high ARR ramping activity; 2) An increased willingness from insurers to make large commitments (often with longer duration); 3) F3Q was the 3rd largest sales activity quarter in the company's history; and 4) Management expressed confidence in maintaining FY25 fully-ramped ARR (FRARR) growth in-line with recent performance in the high-teens (17/19% in FY23/'24). In-line with views we laid out in our Preview, despite GWRE's premium valuation we continue to believe the long-term sustainability of market share gains, incremental near-term upside from the pace of cloud migrations, sales execution in light of improving platform referenceability (a significant driver of F3Q outperformance), and realistic near-term path to $6 in FCF/share will continue to support premium growth-relative multiples. We remain Buy-rated and raise our 12-month price target to $270 ($235 prior)."