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On Monday, Goldman Sachs analysts reiterated a Buy rating and a $235 price target for Guidewire Software Inc . (NYSE: NYSE:GWRE), which is currently trading at $215.02. The stock has demonstrated remarkable strength, delivering an 88.75% return over the past year and trading near its 52-week high of $219.59. The analysts expressed optimism ahead of the company’s fiscal third-quarter 2025 earnings report, scheduled for Tuesday, June 3. According to InvestingPro, 10 analysts have recently revised their earnings estimates upward for the upcoming period, with price targets ranging from $135 to $250. They anticipate updates on the company’s cloud deal momentum, net new annual recurring revenue (ARR) pacing compared to the first half of fiscal 2025, and expectations for fully-ramped ARR through the end of the fiscal year.
The analysts expect Guidewire to report a 19% increase in total revenue, a 29% rise in subscription and support revenue, and a non-GAAP operating margin of approximately 14%, compared to about 9% in the third quarter of fiscal 2024. This growth trajectory aligns with the company’s recent performance, as InvestingPro data shows revenue growth of 17.16% in the last twelve months, with a healthy gross profit margin of 61.43%. For detailed earnings analysis and more exclusive insights, investors can access the comprehensive Pro Research Report, available to InvestingPro subscribers. They project net new ARR of around $28 million, matching the figure from the third quarter of fiscal 2024. The analysts believe this projection could be conservative if recent cloud migration trends persist.
Despite modestly lower third-quarter ARR guidance compared to consensus estimates, the analysts attribute this to management’s visibility into the timing of ARR from the backlog rather than any underlying issues with the business. They note that Guidewire has historically exceeded ARR guidance in 16 of the last 18 quarters.
The analysts also acknowledge Guidewire’s premium valuation, as its shares currently trade at approximately 12 times estimated calendar year 2026 enterprise value-to-sales, compared to an average of 6 times for growth software peers. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value, though the company maintains a "GOOD" overall financial health score of 2.59. They remain confident in the company’s long-term market share gains, potential upside from cloud migrations, and a realistic path to $6 in free cash flow per share, which they believe will support premium growth-relative multiples. The company operates with moderate debt levels and maintains strong liquidity, with a current ratio of 2.65.
In other recent news, Guidewire Software Inc. has been the subject of various analyst reports and strategic moves. DA Davidson recently downgraded Guidewire from Buy to Neutral, maintaining a price target of $226, due to perceived valuation concerns after strong stock performance. Meanwhile, Stifel continues to uphold a Buy rating with a $230 target, citing Guidewire’s strong position and anticipated growth in cloud adoption. RBC Capital Markets identified Guidewire as a potential buying opportunity amid broader market declines due to tariff announcements, highlighting its defensive stance.
In a strategic development, Guidewire announced the acquisition of Quantee, a Polish InsurTech startup, to enhance its insurance pricing capabilities. JMP Securities maintained a Market Outperform rating with a $250 target following this acquisition, emphasizing its potential for product innovation and talent infusion. Additionally, Guidewire’s recent fiscal second-quarter earnings exceeded DA Davidson’s projections, leading to an upward revision of financial forecasts for fiscal 2025.
Guidewire’s management reported 12 cloud deals for the quarter, including five with new customers, demonstrating continued market expansion. Analysts and investors are closely watching Guidewire’s upcoming fiscal third-quarter report for further insights into its financial performance and strategic direction. These developments reflect Guidewire’s active positioning within the software sector and its ongoing efforts to strengthen its market presence.
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