How are energy investors positioned?
Wednesday, Stephens initiated coverage on OneStream Inc. (NASDAQ:OS) with an Overweight rating and set a price target of $27.00, representing a potential 22% upside from the current price of $22.07. The firm sees OneStream as having a high potential to become a leading software platform for the office of the CFO. Stephens highlighted the company’s impressive track record of sustained revenue growth, which has outpaced its peers, even in periods of lackluster enterprise demand. According to InvestingPro data, OneStream’s revenue grew by 30.5% in the last twelve months.
OneStream’s success is partly attributed to its ability to satisfy the stringent demands of enterprise customers, who have shown very high product satisfaction rates. The company maintains a healthy financial position with more cash than debt on its balance sheet and a strong current ratio of 2.36. Stephens also noted the opportunity for accelerated growth through the company’s mid-market sales efforts, which could exceed expectations. For deeper insights into OneStream’s financial health and growth potential, InvestingPro subscribers have access to over 30 additional key metrics and analysis.
The firm expects the ongoing replacement cycle of legacy ERP CPM products to continue for many years, providing a long-term tailwind for OneStream’s top-tier growth. While the stock has faced headwinds, declining nearly 30% over the past six months, analysts maintain optimistic projections, with consensus forecasting profitability this year. Despite this, Stephens acknowledged that OneStream still has relatively low brand awareness among CFOs, presenting a significant opportunity for growth through increased marketing efforts.
While Stephens is optimistic about OneStream’s prospects, the firm did not overlook potential challenges. The transition from focusing on enterprise to mid-market customers carries some risk, and the company is just beginning a more substantial campaign to raise CFO awareness. Additionally, there are concerns about macroeconomic demand influenced by tariffs and other economic policies.
The Overweight rating and $27.00 price target reflect Stephens’ confidence in OneStream’s future performance and its strategic positioning in the software market for financial officers.
In other recent news, OneStream Inc. reported its fourth-quarter financial results, revealing a 29% increase in revenue to $132.5 million and a 35% rise in subscription revenue to $118.6 million. Despite these gains, the company faced a significant GAAP operating loss of $47.4 million, contrasting with a modest income in the same quarter last year. The fiscal year 2024 saw total revenue climb by 31% to $489.4 million, yet the GAAP operating loss widened to $319.5 million, heavily influenced by equity-based compensation expenses. Following these results, JPMorgan downgraded OneStream from Overweight to Neutral, lowering the price target to $26, citing deal slippage as a concern. Goldman Sachs also adjusted its price target to $36 while maintaining a Buy rating, noting OneStream’s strong customer retention and product innovation. Raymond (NSE:RYMD) James reduced the price target to $32 but retained an Outperform rating, acknowledging solid growth despite foreign exchange impacts. BMO Capital lowered its target to $34, maintaining an Outperform rating, highlighting moderate revenue upside and margin improvements. These developments reflect a cautious but optimistic outlook from analysts, with attention on OneStream’s future growth and strategic positioning.
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