2024-01-26 15:11:10 ET
Summary
- Smartsheet's shares have been a laggard in my high-growth tech portfolio over 2023, but I believe this could change in 2024.
- Increasing adoption of premium capabilities should be an important company-specific growth driver supported by stabilizing enterprise demand.
- There is a significant valuation gap compared to peers, which should gradually close as topline growth reaccelerates and margins continue to expand further.
Introduction and Investment Thesis
Smartsheet Inc. ( SMAR ) shares have been one of those holdings in my high-growth tech portfolio, whose 2023 performance has been somewhat unsatisfying to me, although they increased more than 20% in value. Last time I covered the company was in June 2023, where I argued that the post-earnings sell-off resulting from a soft billings guidance is overdone. Newly emerging growth drivers, like GenAI-based solutions, improvement in margins and undervaluation compared to peers have been my key reasons supporting the thesis. Although shares increased 17% in value since then, beating the S&P500, I believe there is more room for further upside.
Since my last article Smartsheet made important progress in several areas. Important developments have been made on the product front (e.g.: self-discovery), the slowdown in billings growth seems coming to an end, and margins keep increasing. Despite these positive developments the valuation gap compared to peers widened further, making shares still a good investment at current levels....
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For further details see:
Smartsheet: Stars Aligned For Major Comeback