DCT - Guidewire slumps as Bank of America expects risk/reward more attractive in other stocks

Guidewire Software (GWRE -4.6%) stock slumped amid a downgrade by Bank of America to Underperform from Neutral with a price target of $125, down from $132. BofA analyst Brad Sills said that while the company outlined "healthy progress" with its cloud transition at its analyst day last week, shares are currently trading at a growth adjusted multiple in line with the small-to-mid cap software peers and he believes a "best case scenario" for ARR growth is high teens, which he views as unlikely to drive material multiple expansion. The chart below shows YTD, total return performance for GWRE and its peers Pegasystems and Manhattan Associates; and Duck Creek, which has a lower market cap than Guidewire. The analyst also noted that Duck Creek (DCT -4.9%) software revenue growth is estimated to be 37% in FY21, outpacing Guidewire, leading him to believe that the risk/reward is "more attractive in other software stocks." Consensus Revenue

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Guidewire slumps as Bank of America expects risk/reward "more attractive in other stocks