Clearwater stock holds Buy rating, $32 target from DA Davidson

On Thursday, DA Davidson maintained a positive stance on Clearwater Analytics Holdings (NYSE:CWAN), as analyst Peter Heckmann reiterated a Buy rating with a $32.00 price target. The reaffirmation follows Clearwater’s announcement of strong fourth-quarter results, which saw a 28% year-over-year increase in total revenue and a 39% rise in adjusted EBITDA, surpassing the forecasts set by DA Davidson. According to InvestingPro data, the company maintains impressive gross margins of 73% and has demonstrated solid revenue growth of 23% over the last twelve months.

Clearwater’s financial performance was detailed in a recent conference call where management also provided their initial financial guidance for 2025. This guidance, which does not take into account the pending acquisition of Enfusion, set forth ranges that exceeded both DA Davidson’s and the consensus estimates at the lower end. InvestingPro analysis indicates the company operates with a moderate level of debt and maintains strong liquidity, with current assets nearly 5 times its short-term obligations. While showing strong operational metrics, InvestingPro’s Fair Value analysis suggests the stock may be trading above its intrinsic value.

The company’s robust quarterly outcomes and optimistic future guidance reflect its solid growth trajectory. The forthcoming forecasts from DA Davidson, which are expected to be updated soon, will likely factor in the latest results and management’s projections for the coming years.

Investors and market watchers will be keeping a close eye on Clearwater’s performance as the company continues to navigate its growth strategy and the anticipated integration of Enfusion. The current endorsement from DA Davidson signals confidence in Clearwater’s market position and its ability to maintain an upward momentum.

In other recent news, Clearwater Analytics Holdings reported robust fourth-quarter 2024 earnings that exceeded Wall Street expectations. The company achieved earnings per share of $0.13, surpassing the projected $0.11, and reported revenue of $126.5 million, beating the anticipated $120.39 million. Clearwater Analytics also announced a 25% increase in Annual Recurring Revenue, reaching $474.9 million, and a Net Revenue Retention rate of 116%, achieving their fiscal year 2025 goal ahead of schedule. Piper Sandler upgraded Clearwater Analytics’ stock from Neutral to Overweight, raising the price target from $28.00 to $36.00 following these strong results.

The company highlighted its recent acquisition of Enfusion, which aims to enhance its platform capabilities and offer a comprehensive front-to-end data solution. Piper Sandler analysts view this merger as a strategic move that could improve Clearwater’s competitive edge and create opportunities for cross-selling. Despite issuing fiscal year 2025 guidance slightly above current consensus estimates, Piper Sandler suggests that Clearwater’s targets may be conservative, indicating potential for further growth. Clearwater’s strategic focus on generative AI and product innovation has been pivotal in maintaining its competitive advantage.

The company projects 2025 revenue between $535.5 million and $542 million, with an anticipated EBITDA margin of 34%. The Enfusion acquisition is expected to close in Q2 2025, which Clearwater believes will further enhance its platform, particularly in regulatory reporting and compliance.

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