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On Tuesday, Citi analyst Tyler Radke adjusted the price target for ServiceTitan (NASDAQ:TTAN) shares, increasing it to $113 from the previous target of $109, while maintaining a Neutral rating on the stock. Currently trading at $100.13, the stock sits near its 52-week low of $94.02, though InvestingPro data indicates the stock is in overbought territory based on RSI.
Radke noted that ServiceTitan reported third-quarter numbers that were at the higher end of preliminary figures and provided a fourth-quarter outlook that was notably positive. The company anticipates a 24% year-over-year revenue growth for the fourth quarter, which surpasses the 19% consensus estimate.
The upward revision in growth estimates is primarily attributed to stronger-than-anticipated subscription growth, although usage revenue is forecasted to see a sequential decrease. Radke pointed out that while the fourth-quarter growth projection is marginally below the bull case scenario of 25%, the figures could still be on the conservative side, with investor expectations leaning towards a 3-4 percentage point beat on top-line metrics.
ServiceTitan's robust fourth-quarter outlook may suggest a potential modest rebound in organic growth, leading Radke to incrementally increase his optimism. While the company maintains a healthy gross margin of 65.37%, InvestingPro analysis shows the company is not yet profitable, though analysts expect positive earnings this fiscal year.
Consequently, he has revised his fourth-quarter estimates to align with the company's outlook and has also adjusted the full-year 2026 estimates upward by one point. The new price target of $113 is based on approximately 12 times the fiscal year 2026 enterprise value to sales ratio.
Despite the positive outlook and raised estimates, Citi continues to recommend a Neutral/High Risk stance on ServiceTitan stock. Radke indicated that a more attractive entry point or greater confidence in the sustainability of the company's accelerating growth and improved profitability would be necessary to consider a rating change. According to InvestingPro, which offers 7 additional investment tips for ServiceTitan, the company's Fair Value assessment suggests current overvaluation, with analyst targets ranging from $100 to $125.
In other recent news, ServiceTitan Inc, a software platform for the trades industry, reported a significant increase in its third-quarter revenue, surpassing last year's figures. The company's revenue for the third quarter ending October 31, 2024, was $199.3 million, a 24.6% increase from $160 million in the same period last year. Despite this, the company's adjusted loss per share widened to -$1.74 from -$1.53 year over year.
ServiceTitan has also raised its full-year fiscal 2025 revenue guidance to a range of $761.6 million to $763.6 million, up from previous estimates. For the fourth quarter of fiscal 2025, the company expects revenue to be between $199.0 million and $201.0 million.
In terms of operations, ServiceTitan anticipates non-GAAP income from operations for the fourth quarter to be between $3.0 million and $4.0 million. For the full fiscal year 2025, the company expects this figure to be between $21.4 million and $22.4 million.
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