Stifel has adjusted its outlook on Guidewire (NYSE: NYSE:GWRE), a provider of software solutions for property and casualty (P&C) insurers, by increasing the price target to $175.00 from the previous $140.00.
The firm has reiterated its Buy rating on the stock.
The company concluded its fiscal year with strong results, showcasing approximately 19% growth in fully ramped Annual Recurring Revenue (ARR) and a Cash Flow From Operations (CFFO) margin exceeding 20%.
The fiscal year 2024 marked a significant advancement for Guidewire in its transition to cloud-based services, with the company securing 42 cloud deals, most of which involved migrations, alongside several product launches.
As the focus shifts to the fiscal year 2025, Stifel's outlook is that Guidewire will maintain its momentum in cloud adoption, which is expected to continue enhancing the company's margin and cash flow profile.
The analyst firm believes that Guidewire is in the early stages of a substantial opportunity to transition existing customers to the cloud and to acquire new P&C insurance customers.
In other recent news, Baird raised its price target for Guidewire to $175, citing a 14% increase in Annual Recurring Revenue (ARR), which surpassed the consensus estimate. Additionally, the company's Operating Cash Flow (OCF) margin for fiscal year 2024 concluded at 20%, a significant rise from the previous year.
RBC Capital Markets also adjusted its outlook on Guidewire, increasing the price target to $180, highlighting a 19% growth in fully ramped ARR and a significant beat on operating cash flow expectations.
Goldman Sachs (NYSE:GS) increased its price target for Guidewire to $182, maintaining a Conviction Buy rating on the stock, following an ARR of 1% higher than expected and free cash flow (FCF) 37% greater than anticipated.
Oppenheimer increased the price target for Guidewire to $185, noting the company's ARR surpassing consensus estimates and operating cash flow guidance exceeding Wall Street expectations.
InvestingPro Insights
In light of Stifel's positive outlook on Guidewire (NYSE:GWRE), it's worth considering additional insights from InvestingPro. Notably, Guidewire is expected to see a growth in net income this year, which aligns with the analyst firm's expectations for continued momentum in the company's cloud adoption and financial performance. Moreover, Guidewire's stock has been characterized by low price volatility, providing a level of stability for investors.
From a financial standpoint, Guidewire has a market cap of approximately $11.9 billion and has shown a revenue growth of 8.3% in the last twelve months as of Q4 2024. Despite operating at a loss with a negative operating income margin of -5.82%, the company's gross profit margin remains strong at 59.5%. Investors should also note that Guidewire's stock is trading near its 52-week high at 93.55% of the peak price, which may influence investment decisions.
For those seeking more comprehensive analysis, InvestingPro offers additional tips on Guidewire, including insights on the company's moderate level of debt and its high revenue valuation multiple. To explore these further, investors can visit https://www.investing.com/pro/GWRE, where a total of 10 InvestingPro Tips are available to help refine investment strategies.
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