Guidewire (GWRE) Surges 44.8% YTD: Will the Trend Continue?
Guidewire Software GWRE has witnessed healthy momentum this year so far. Shares of the company have gained 44.8% year to date compared with the sub-industry’s growth of 13.1%. The company is a leading provider of software solutions for property and casualty (P&C) insurers.
The company's solutions aid in reducing risk via increased productivity, bringing speed to market, digital engagement and simplifying IT infrastructure. Further, the company also offers Guidewire InsuranceSuite and Guidewire InsuranceNow, which provide solutions to support the entire insurance lifecycle.
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Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #3 (Hold) stock.
The company’s performance is gaining from higher revenue growth across the subscription and support business segment. In the fourth quarter, the subscription and support business segment's revenues soared 25.4% from the year-ago quarter to $117.3 million, owing to higher subscription revenues.
The company’s focus on enhancing the Guidewire Cloud platform with new capabilities is expected to boost sales of subscription-based solutions. Guidewire Cloud continues to gain momentum with 17 cloud deals in the fiscal fourth quarter.
The company’s acquisition of Cyence has also allowed it to provide an entire life cycle to the insurance products, from designing to transaction management. The addition of HazardHub is likely to have bolstered Guidewire’s portfolio, expanding the company’s presence in the P&C market.
The company’s InsuranceSuite is being leveraged by leading insurance companies. In September, Guidewire announced that Hawaii Employers’ Mutual Insurance Company has selected Guidewire InsuranceSuite on Guidewire Cloud to boost its core business, streamline its IT operations and accelerate business growth.
Going ahead, the company is likely to benefit as insurers modernize their legacy mainframe systems and replace previously modernized on-prem systems. For fiscal 2024, the company expects total revenues between $976 million and $986 million. ARR is projected to be in the range of $846-$858 million.
GWRE’s fiscal 2024 and 2025 revenues are anticipated to rise 8.5% and 11.8% year over year, respectively. The company’s earnings are expected to increase 111.4% and 81.5% on a year-over-year basis in fiscal 2024 and 2025, respectively.
Apart from its solid fundamentals, the company is prone to a few risks. The company’s products and services are only meant for P&C insurers. This leads to a lack of product diversification. Also, frequent acquisitions made by the company lead to rising integration risks.
Stocks to Consider
Some better-ranked stocks in the broader technology space are Asure Software ASUR, Aspen Technology AZPN and Badger Meter BMI. Asure Software presently sports a Zacks Rank #1 (Strong Buy), whereas Badger Meter and Aspen Technology currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Asure Software’s 2023 earnings per share (EPS) has increased 35% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 676.4%. Shares of ASUR have surged 59.1% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 6.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 17.1% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 1.4% in the past 60 days to $2.86.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 58.8% in the past year.
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Badger Meter, Inc. (BMI) : Free Stock Analysis Report
Guidewire Software, Inc. (GWRE) : Free Stock Analysis Report
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Aspen Technology, Inc. (AZPN) : Free Stock Analysis Report
