Guidewire (GWRE – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Michael Turrin from Wells Fargo maintained a Buy rating on the stock and has a $200.00 price target.
Michael Turrin’s rating is based on Guidewire’s strong market share growth and the company’s positive progression towards financial targets. In his analysis, Turrin notes that Guidewire has surpassed $600 billion in Direct Written Premiums (DWP), capturing over 20% of the market share—a few percentage points gained in FY23. The company’s Cloud Annual Recurring Revenue (ARR) continued to grow approximately 30% year-over-year in FY23, albeit at a lower rate than previous years. Looking forward to FY25, the expectation is for substantial incremental Service & Support (S&S) margins, estimated at around 80%, compared to approximately 75% in FY24, indicating healthy profitability going forward.
Turrin also anticipates management adjustments to the $1.5 billion target model, given the company’s guidance is tracking above prior mid-term (MT) guidance, with S&S and overall margin close to long-term targets. The new long-term target is expected to be set around $2 billion ARR, with S&S Gross Margin (GM) above 75%, total GM between 70-75%, and Operating Margin (OM) from 29-32%. Additionally, key metrics for the next fiscal year project an increase in cloud customers and a higher cloud ARR mix, suggesting Guidewire is on a steady path to achieving its financial targets. These factors combined with the company’s ongoing transition towards a cloud-based business model and potential for significant margin expansion support the Buy rating and the raised price target.
In another report released today, J.P. Morgan also maintained a Buy rating on the stock with a $210.00 price target.
Based on the recent corporate insider activity of 54 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of GWRE in relation to earlier this year.
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Guidewire (GWRE) Company Description:
Guidewire Software, Inc. engages in the provision of technology platform, which composes of software, services, and a partner ecosystem, for the global Property and Casualty insurance industry. Its products include InsuranceSuite, PolicyCenter, ClaimCenter, BillingCenter, Add-on Modules, and InsuranceNow. The company was founded by Marcus S. Ryu on September 20, 2001 and is headquartered in San Mateo, CA.
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