- Last week, Needham analyst Mayank Tandon attended Guidewire Software, Inc’s (NYSE:GWRE) analyst day, where management highlighted the company’s progress on its model transition as P&C insurance carriers shift their core systems to the cloud.
- His key takeaway from the event is that the company is gaining steady momentum by signing new and existing customers to the cloud.
- However, given the softening economic environment, recent customer wins are signing on with shorter commitments versus prior periods, which in turn is expected to weigh on near-term and medium-term subscription growth and is delaying the margin benefits from the transition to the cloud.
- While he views GWRE as a premium provider of insurance cloud software, given the prolonged model transition and modest subscription revenue growth, he considers the risk-reward neutral in a October 10 note titled “Analyst Day Takeaways; Lack of Positive Catalysts Keeps Us on the Sidelines.“
- Accordingly, we maintained a Hold rating.
- Wells Fargo analyst Michael Turrin maintained Guidewire Software with an Underweight and cut the price target from $65 to $60.
- Price Action: GWRE shares traded lower by 3.56% at $61.01 on the last check Monday.
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