After growing by 300% in 18 months, Conductor software New York Stock Exchange: GWRE There’s finally a correction that investors can sink their teeth into. The market fell more than 10% on the back of a strong report, compounded by improvised forecasts, cautious stances and other factors suggesting new all-time highs will be set.
The market may take some time to find its feet and gain momentum, but this is also good news, allowing investors and traders to price entry and build on their positions for what is likely to be a sustained uptrend in 2025.
What does Guidewire Software do? Guidewire Software is the leading AI-powered cloud operating platform for P&C insurers. It offers services covering the entire spectrum of the P&C industry, as well as comprehensive services for some. The new deals supporting the announcement bolstered first-quarter results and second-quarter guidance, which beat consensus estimates.
The company signed nine new deals, including with five tier 1 insurers, including P&C insurers with the largest market share, stable business and healthy capital reserves. While it is not alone in the industry, it has a moat in a growing industry that is well suited to AI enhancement and automation.
Guidewire Software Today
Conductor Software
(As of 12/06/2024 ET)
- 52 week range
- $95.02
▼
$209.15
- P/E ratio
- 493.25
- Target price
- $193.00
Guidewire Software Enters Healthy Correction: Positive Outlook
Guidewire Software had a strong quarter, with revenue, margins, earnings and guidance exceeding its highest expectations. Net sales of $262.9 million rose 27% year-over-year and beat MarketBeat’s consensus estimate by 350 basis points, driven by strength across all segments driven by new deals and large customers.
Subscriptions and support, the largest segment, grew 33%, offset by slower services growth (22%) and license growth (10%).
Margin news includes improved gross and operating margins, with GAAP operating loss narrowing to nearly $0, adjusted profitability and prospects for improvement throughout the year. The end result is adjusted earnings per share of $0.43, up $0.43 from last year and $0.13 ahead of estimates, prompting management to improve its guidance for the second quarter and full year.
Guidewire’s outlook is strong as Q2 targets are above consensus and the full-year range that includes consensus is likely to be cautious. The growth of process automation in the insurance industry is projected to at least double by the end of the decade.
Analysts raise conductor targets and point to new all-time highs in 2025
Guidewire Software Stock Forecast Today
$193.00
Growth potential 8.69%Moderate purchase
Based on ratings from 14 analysts
| High forecast | $231.00 |
|---|---|
| Average forecast | $193.00 |
| Low forecast | $95.00 |
Guidewire Software Inventory Forecast Details
Analyst sentiment trends for Guidewire’s 2024 quality and price targets remain strong. Coverage is growing, with 75% more analyst coverage this year than last year. 14 respondents tracked by MarketBeat rate the stock a Moderate Buy, but 78% rate it a Buy or Outperform; only two rate it as a hold and one as a sell.
The consensus price target doesn’t suggest much upside compared to critical support, but the trend is more important. The $190 consensus suggests 3% to 5% market upside from critical support, but revision trends, including those released after the first-quarter report, place this stock in the upper $220 to $230 range. That’s enough to hit a new all-time high and send the stock price up nearly 30%.
Technical action is tough in early December, but a bottom should form quickly. The market is down more than 10% and is testing support at a level where it could be very strong. The critical level is around $170/$175, which can be reached before the end of the year. One of the barriers to this market is its valuation.
Trading at $170, it’s still trading at 30 times 2030 earnings per share estimates and may be reaching its full growth potential. However, the company’s consistent outperformance, insurance industry growth, and insurance industry automation growth prospects suggest valuations are stretched and its value higher than current valuations suggest.
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