OneStream shares hold Buy rating as Loop Capital points to market expansion

On Wednesday, Loop Capital maintained a positive stance on OneStream Inc. (NASDAQ:OS), reiterating a Buy rating alongside a $35.00 price target. The firm's assessment follows OneStream's recent financial performance, which showcased robust growth and a reduction in operating losses. OneStream reported revenue growth of 36%, exceeding the 35% projection by Loop Capital. The company's subscription services expanded by 44%, and operating losses were notably lower than anticipated, at approximately 7% of revenue. This marks a significant improvement compared to the 15.4% loss from the previous year.

Management at OneStream expressed optimism about the future, highlighting the digital transformation within corporate finance as an ongoing process. They believe that there is a substantial replacement cycle ahead due to outdated systems needing upgrades and the evolving requirements of corporate finance teams. This perspective suggests a continued opportunity for growth in the specialized financial applications market.

Despite the high valuation of OneStream's shares, which currently stand at 10.5 times enterprise value to revenue based on estimates for 2026, Loop Capital sees the bigger picture. The firm's outlook is anchored in the belief that the market for specialized financial applications is large and dynamic. The replacement cycle, driven by the need to update aging systems and meet the changing demands of corporate finance teams, positions OneStream as a leader in this space.

Loop Capital's endorsement hinges on the belief that the market will continue to recognize OneStream's value, potentially leading to several quarters of estimate-beating performance. This suggests that the current valuation might be justified by the company's growth prospects and underestimated forecasts. Loop Capital's reiterated Buy rating and $35 price target reflect confidence in OneStream's ongoing success and leadership in the financial applications market.

In other recent news, OneStream Inc. has been the subject of several positive financial assessments following strong Q2 results. Baird, Guggenheim, Needham, and BofA Securities all raised their price targets for OneStream, maintaining Buy ratings. The company's revenue saw a year-over-year increase of 36%, with subscription growth at an impressive 44%. OneStream's robust performance was also reflected in a 31% growth in Annual Recurring Revenue (ARR) and a year-over-year increase of 41% in Remaining Performance Obligations (RPO).

Analysts have highlighted OneStream's success in the current IT spending environment, attributing it to early adjustments and skilled operations. Notably, the company's artificial intelligence offering, Sensible ML, is garnering significant demand among new customers. The management team at OneStream has expressed optimism about the latter half of the year and the growing influence of AI in their offerings.

These recent developments underscore a positive outlook for OneStream, with various firms expressing confidence in the company's growth trajectory and market position. However, investors are advised to focus on OneStream's performance relative to the upcoming third quarter of 2024 and the full year's estimates to gauge the company's progress.

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