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Why this stealth tech company's stock has surged 80%

Brian Sozzi
Editor-at-Large

Smartsheet sounds like a high-class roll of organic paper towels found in the supermarket aisles. But alas, it’s far from a consumer products seller. Rather, it is a fast-growing tech play with a stock that has completely flown under the radar of most on Wall Street.

Shares of Smartsheet (SMAR)—a provider of workplace tech productivity software that integrates with platforms such as Slack, Microsoft Teams and Adobe—has seen its stock surge 80% over the past year. The stock has more than doubled from its April 27, 2018 closing price, the date the company debuted on the Nasdaq Composite.

Ask Smartsheet CEO Mark Mader on why the stock has come on so strong and he quickly points to the size of the market opportunity as the main reason. It doesn’t hurt that Smartsheet is a software as a service (SaaS) tech company—offering Wall Street a consistent stream of revenue in which to model future valuation.

“It’s a market around empowerment. There are thousands of organizations that subscribe to Smartsheet all over the world. They are recognizing they need to get more from their workforce,” Mader said on Yahoo Finance’s The First Trade. “So when we think about unlocking teams to better manage projects and processes in a modern way, that is a globally relevant and very big topic today.”

Smartsheet Inc. President and CEO Mark Mader attends his company's IPO on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 27, 2018. REUTERS/Brendan McDermid

Smartsheet’s third quarter sales surged 53% year-over-year, driven by growth in its subscription and professional services lines of business. The company had an impressive 134% client retention rate and more than 5.8 million users.

More of Smartsheet’s deals continue to be with larger accounts in terms of annual revenue spent. Mader said the company has recently won its first round of business with the U.S. government, a contract with the National Oceanic and Atmospheric Administration (NOAA).

“We continue to view Smartsheet as a strategic asset that addresses a new market that has been difficult to categorize, as it enables white collar workers to harness the power of IT. Regardless of how you consider the market, we believe it is an opportunity that measures in the tens of billions of dollars growing at or near double digits,” said Jefferies tech analyst Brent Thill in a new note to clients. Thill has a Buy rating on Smartsheet with a $52.00 price target.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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