On Friday, Oppenheimer adjusted its outlook on Guidewire (NYSE:), increasing the price target to $200 from $185, while retaining an Outperform rating for the company’s stock. The revision comes as the firm anticipates Guidewire’s management to outline a definitive timeline for achieving its long-term financial goals during the upcoming investor day on October 10, 2024.
The targets in question include reaching $1.5 billion in Annual Recurring Revenue (ARR) and an operating cash flow (OCF) margin between 29% and 32% by fiscal years 2027/2028. Current investor projections see the $1.5 billion ARR goal being realized in FY28, based on Guidewire’s ongoing mid-teens growth rate. Although there is potential for the OCF margin target to increase slightly, the company has indicated a preference for investing in product development, which may moderate the near-term expansion rate.
Additionally, Oppenheimer anticipates that new long-term objectives may be introduced by Guidewire’s management. Assuming the continuation of current growth rates, projections suggest that Guidewire could achieve $2.0 billion in ARR by FY30, along with maintaining a mid-70% gross margin and a mid-30% OCF margin. The firm expects any commentary on forward growth rates to align with the mid-teens range, bolstered by factors such as Tier-1 customer adoption, cloud migrations, and pricing optimization strategies.
In other recent news, Guidewire Software has seen a flurry of positive developments. JPMorgan raised its price target on Guidewire shares to $210, citing the company’s potential to benefit from the insurance industry’s shift toward modernization. Stifel also increased its price target for Guidewire to $200, recognizing the company’s sustained cloud momentum.
Other firms, including Baird, Citi, and DA Davidson, have provided positive feedback on Guidewire’s recent performance, emphasizing potential for Annual Recurring Revenue growth and improved profitability.
Guidewire’s management has offered fiscal 2025 guidance that surpassed prior forecasts, projecting to hit the $1 billion Annual Recurring Revenue milestone this fiscal year, driven by its successful cloud platform. The company also expects to become GAAP profitable in fiscal year 2025, with total revenue expected to be between $1.135 billion and $1.149 billion.
In addition to financial successes, Guidewire has expanded its Board of Directors with the appointment of Mark Anquillare, former President and COO of Verisk…
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