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On Thursday, Piper Sandler analyst firm shifted its stance on Clearwater Analytics Holdings (NYSE:CWAN), upgrading the company’s stock rating from Neutral to Overweight. Accompanying this upgrade, Piper Sandler also increased the price target for Clearwater Analytics from $28.00 to $36.00. The $6.69 billion market cap company currently trades above its InvestingPro Fair Value, with analyst targets ranging from $28 to $40.
The upgrade follows Clearwater Analytics’ fourth-quarter results, which surpassed Wall Street’s expectations in terms of both revenue and margins. The company reported a 25% growth in Annual Recurring Revenue (ARR), bolstered by a Net Revenue Retention (NRR) rate of 116%. This marks an improvement from the third quarter’s 114% NRR and achieves the company’s fiscal year 2025 exit goal of 115% NRR a year early. InvestingPro data shows strong financial health with a 72.25% gross margin and robust liquidity, maintaining a current ratio of 4.66.
The focus during the earnings call was on Clearwater’s recent acquisition of Enfusion, a move that enables the company to offer a comprehensive front-to-end data solution to its clients. Piper Sandler’s analysts believe that the merger presents a strong value proposition, which could help Clearwater Analytics to increase its share of wallet with existing customers and improve its win rate with potential new clients.
Piper Sandler emphasizes that Clearwater Analytics’ broadened service offerings are likely to enhance the company’s competitive edge, create opportunities for cross-selling and upselling, and result in cost synergies. Despite Clearwater Analytics issuing fiscal year 2025 guidance that is only slightly above the current consensus estimates, the analysts at Piper Sandler view these targets as conservative, suggesting there could be room for further growth.
In other recent news, Clearwater Analytics Holdings Inc. reported its fourth-quarter 2024 earnings, exceeding Wall Street expectations. The company achieved an earnings per share (EPS) of $0.13, surpassing the forecast of $0.11, and recorded a revenue of $126.5 million, beating the anticipated $120.39 million. This performance marked a 28% year-over-year revenue growth, supported by a 25.3% increase in Annualized Recurring Revenue (ARR) to $474.9 million. Clearwater’s full-year revenue for 2024 reached $451.8 million, representing a 22.7% increase from the previous year. The company is projecting 2025 revenue between $535.5 million and $542 million, with an expected EBITDA margin of 34%. Clearwater is also expanding its capabilities with the planned acquisition of Infusion, expected to enhance its platform in regulatory reporting and compliance. In analyst news, Clearwater’s stock was positively received following these announcements, reflecting strong investor sentiment.
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