On Thursday, Wells Fargo (NYSE:WFC) maintained an Overweight rating on Smartsheet Inc . (NYSE: NYSE:SMAR) stock and raised the price target to $50.00 from $47.00.
The firm noted that Smartsheet's recent strategic changes have started to yield positive results, particularly in the first fiscal quarter. The company has seen an uptick in enterprise strength, alongside further margin expansion.
The analyst highlighted the company's valuation support, pointing out that Smartsheet's shares are trading below 20 times the calendar year 2025 estimated enterprise value to free cash flow (EV/FCF) in after-hours trading.
Currently, the shares are valued at 5 times the next twelve months' enterprise value to sales (NTM EV/S) and 22.5 times the NTM EV/FCF.
The updated $50 price target is based on a combination of 5 times forward NTM revenue and 22.5 times NTM free cash flow estimates.
This valuation is considered a discount compared to Smartsheet's growth software peers, but Wells Fargo views it as reasonable. The firm justifies this by citing the company's continued growth and significantly improving margins.
Wells Fargo's positive outlook on Smartsheet is backed by the company's performance and strategic initiatives that appear to be effectively enhancing its market position. The firm's analysis suggests that Smartsheet's stock offers an attractive entry point for investors at the current trading levels.
In other recent news, Smartsheet Inc. has reported a robust start to the fiscal year, with a 20% increase in total revenue, hitting $263 million in the first quarter.
The company's adjusted earnings per share were $0.32, exceeding analyst expectations of $0.27. Subscription revenue also saw a 21% increase year-over-year, reaching $249.1 million.
RBC Capital and Canaccord Genuity have both raised their price targets on Smartsheet, citing the company's strong performance and the introduction of a new $150 million stock buyback program.
Looking forward, Smartsheet anticipates total revenue for the second quarter to be between $273 million and $275 million, with non-GAAP operating income projected between $38 million and $40 million. These are among the recent developments for Smartsheet.
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