JPMorgan has resumed coverage of Clearwater Analytics (CWAN, Financial), assigning it an Overweight rating with a revised price target of $28, down from the previous target of $33. The adjustment follows Clearwater's recent acquisition of Enfn, which is expected to enhance the company's standing among asset managers and hedge funds.
The analyst notes that while 2025 is anticipated to be a transitional period for Clearwater, the integration process should be smooth due to the compatible cloud-native infrastructure of both companies. The acquisition is seen as a strategic move towards providing a comprehensive end-to-end solution, which is likely to aid Clearwater in expanding geographically and achieving sustained revenue growth of 20%.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 9 analysts, the average target price for Clearwater Analytics Holdings Inc (CWAN, Financial) is $35.44 with a high estimate of $40.00 and a low estimate of $32.00. The average target implies an upside of 55.80% from the current price of $22.75. More detailed estimate data can be found on the Clearwater Analytics Holdings Inc (CWAN) Forecast page.
Based on the consensus recommendation from 10 brokerage firms, Clearwater Analytics Holdings Inc's (CWAN, Financial) average brokerage recommendation is currently 1.7, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Clearwater Analytics Holdings Inc (CWAN, Financial) in one year is $19.14, suggesting a downside of 15.87% from the current price of $22.75. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Clearwater Analytics Holdings Inc (CWAN) Summary page.
CWAN Key Business Developments
Release Date: February 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Clearwater Analytics Holdings Inc (CWAN, Financial) reported a 28% year-over-year revenue growth for Q4 2024, reaching $126.5 million.
- The company achieved a Net Revenue Retention (NRR) rate of 116%, surpassing their target a year ahead of schedule.
- Clearwater's gross margin improved significantly, reaching 78.8% for Q4 2024, indicating strong profitability.
- The company successfully expanded its client base, adding marquee clients such as Imperial Fund Capital Partners and the United Nations Federal Credit Union.
- Clearwater's strategic acquisition of Infusion is expected to enhance their platform capabilities, offering a comprehensive front-to-back solution for investment management.
Negative Points
- The company faced a one-time negative free cash flow of $29.8 million in Q4 2024 due to a payment to terminate a tax receivable agreement.
- Despite strong growth, the integration of Infusion poses challenges, as it is a larger acquisition than Clearwater has historically managed.
- The company acknowledged that some regulatory-driven revenue in Q4 2024 was pulled forward from Q1 2025, which may impact future quarterly comparisons.
- Clearwater's insights and marketplaces initiatives are not expected to significantly contribute to revenue growth until 2026 or later.
- The company faces potential headwinds from currency fluctuations, particularly with a significant workforce presence in India.
