New Relic ( NYSE: NEWR ) may be worth $60-$80 share in a potential sale after a Reuters report that the company is set to explore alternatives after interest from private equity, according to Wall Street analysts.
New Relic ( NEWR ) may see $60-$70/share in a sale, JMP Securities analyst Erik Suppiger, who has a market perform rating on the stock, wrote in a note. The price range assumes an EV/ CY23E revenue multiple of 3.5x-4x, which is a 39-49% discount to JMP's universe of comparable companies.
"We believe the discount is justified by New Relic’s slower growth and depressed margins and see shares as fairly valued," Suppiger wrote.
New Relic is less likely to see strategic acquirer, though if it does logical names would include IBM ( IBM ) or Oracle ( ORCL ), according to Suppiger.
Truist analyst Joel Fishbein believes $80/share is a fair takeout price for New Relic ( NEWR ). He has as buy rating and $80 price target.
Raymond James analyst Adam Tindle sees the potential for a takeout price of $70-$75/share based on comparable company Splunk ( SPLK ), which trades at 6x EV/revenue. Using the recently announced Zendesk ( ZEN ) sale to Permira and Hellman & Friedman, could also argue for a price of $70-$75. Tindle rates NEWR strong buy.
RBC analyst Rishi Jaluria, who predicted in April that New Relic ( NEWR ) may be a takeout target , on Wednesday raised his price target to $62 from $45 on the Reuters report. While ZEN’s takeout was for ~6x (implying $79/ share), he sees 4x–5x a "more reasonable, considering broader multiple compression and NEWR’s financial profile." He has a sector perform on NEWR.
The potential takeout news comes as NEWR has been under pressure from activist hedge fund Jana Partners. Last month New Relic ( NEWR ) announced that it appointed Kevin Galligan, a Partner of JANA Partners as part of a cooperation agreement.
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New Relic may be worth $60-$80/share in a potential sale - analysts