2023-06-27 08:49:11 ET
Guidewire Software ( NYSE: GWRE ) was upgrading to Buy from Hold at Stifel which noted that the cloud transition is hitting its stride.
The firm also raised the price target on Guidewire's shares to $85 from $75.
Stifel analysts said they recently conducted a survey of P&C Insurers to get insights on their vendor relationships, views of Guidewire specifically, plans related to cloud adoption and migration, and spending intentions.
The firm added that results, and recent company performance, indicate that Guidewire has turned the corner on its cloud transition, and the industry's gradual acceptance of the cloud, alongwith a better product, will position GWRE for long-term growth in the P&C Insurance space.
The analysts think that the recent traction in cloud sales and go-lives indicate that margins would only improve from here, and there remains significant opportunity from cloud migrations within the base, net new deployments and expansions steered by improvements in the cloud product.
As per the survey, 41% of Guidewire customers are already 100% on the cloud, with 32% Hybrid and 27% still 100% on-prem. All the hybrid respondents remain less than 50% on the cloud. However, in spite of less than half fully on the cloud, 32% of Guidewire customers which responded to the survey currently have no plans to move to the cloud.
The analysts expect the customers with no plans to shift to the cloud will eventually come to the conclusion that additional innovation from companies such as Guidewire will only be unlocked via the cloud platform.
In addition, the firm said that compared to its Salesforce ( CRM ) survey, in which about two-thirds of customers were already investing in or actively pursuing AI solutions, only 45% of Guidewire customer respondents have plans to pursue AI investments going ahead.
The analysts added that with the industry as a whole being a slower to cloud/next generation technology, they were not surprised by this disparity. The analysts believe investment in AI technology is not imperative for Guidewire to be successful over the next three to five years, but the advancements the company has made in its Analytics solutions will set the stage for further success once all customers are fully on the cloud.
GWRE +3.86% premarket $72.20 June 27
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Guidewire stock rises after Stifel upgrades to Buy