Recent performance snapshot for Guidewire Software (GWRE)
Guidewire Software (GWRE) has recently drawn attention after a mixed stretch in its share performance, with a small gain over the past month set against weaker moves over the past 3 months and year.
See our latest analysis for Guidewire Software.
At a share price of US$144.68, Guidewire’s recent pattern shows pressure in the near term, with a 1-day share price return of 4.40% decline and a year-to-date share price return of 22.89% decline. This is set against a 3-year total shareholder return of 76.33%, which reflects stronger past momentum than the last few quarters.
If Guidewire’s recent pullback has you thinking about where else growth or resilience might show up, it can be useful to scan 35 AI infrastructure stocks
Guidewire now trades at US$144.68, with annual revenue of US$1.34b, net income of US$189.36m, and some analysts seeing upside to a US$234.14 price target. Is this recent weakness a chance to buy, or is future growth already priced in?
Most Popular Narrative: 38.2% Undervalued
Guidewire’s most followed narrative pegs fair value at about $234.14, comfortably above the recent $144.68 close, framing the current pullback as a sizable discount.
The analysts have a consensus price target of $249.786 for Guidewire Software based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $290.0, and the most bearish reporting a price target of just $155.0.
Want to see what sits under that gap between the current price and those targets? The narrative leans on steady revenue compounding, rising margins, and a rich earnings multiple that is anything but conservative.
Result: Fair Value of $234.14 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, there are still clear watchpoints, including execution risk around the cloud transition and pressure from software multiple compression that could challenge the underpriced story.
Find out about the key risks to this Guidewire Software narrative.
Another View: Rich P/E Puts Pressure On The Story
While the SWS DCF model suggests Guidewire is undervalued at $144.68 versus an estimated $203.95 future cash flow value, the share price also sits on a P/E of 64.7x. That is more than double the US Software industry at 28.5x and well above the 30.7x fair ratio the market could move toward. This raises the question of whether the discount to fair value outweighs the risk of a valuation reset.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
The mix of risks and rewards around Guidewire is clear. It makes sense to move quickly and test the assumptions against your own expectations using 3 key rewards and 1 important warning sign.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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