On Wednesday, Goldman Sachs initiated coverage on Similarweb Ltd (NYSE:SMWB) stock, a digital research, marketing, and sales intelligence platform, with a Buy rating and a price target of $16.00. The stock has shown remarkable momentum, delivering a 145% return over the past year according to InvestingPro data.
The new coverage is based on the company's comprehensive data analysis capabilities, which span over 100 million websites, 8 million apps, and 20 million companies.
The platform is designed to provide valuable insights for brands and businesses by benchmarking online activity, analyzing competitors, tracking shopper behavior, and enhancing keywords and SEO strategies.
Goldman Sachs highlighted the potential for growth acceleration across various metrics, including revenue, cRPO (committed monthly recurring revenue), TTM (trailing twelve months) billings, and customer growth. The company has demonstrated solid execution with revenue growth of 13.4% and impressive gross profit margins of 78.6%.
Goldman Sachs noted that Similarweb's recent product developments, particularly the Similarweb 3.0 platform, along with improvements in its go-to-market strategy, contribute to the company's strong performance. Additionally, the firm is gaining traction with its data-as-a-service offering for large language models (LLMs), which further supports the positive outlook.
The analyst's remarks underscore the expectation of margin expansion for Similarweb, pointing to improving gross margins (GMs), contribution margin, and free cash flow (FCF). This is particularly significant in a broader software industry context that has generally been experiencing growth deceleration.
The Buy rating and $16.00 price target reflect confidence in Similarweb's ability to continue its growth trajectory and capitalize on its unique market position. The endorsement from Goldman Sachs suggests that Similarweb stands out as a robust investment opportunity within the digital intelligence space.
For deeper insights into Similarweb's valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 12 additional ProTips and a detailed Pro Research Report, part of our coverage of over 1,400 US stocks.
In other recent news, Similarweb reported significant growth in its Q3 2024 earnings call, with a strong emphasis on AI market expansion. The company's revenue increased by 18% year-over-year to $64.7 million, and customer count rose by 21%. Similarweb also secured its second 8-digit customer, contributing to a raised full-year 2024 revenue guidance of between $249 million and $250 million.
The company's remaining performance obligations grew to $212 million, a 27% increase from the previous year, and over 500,000 new website registrations were recorded. For Q4 2024, Similarweb expects revenue to be between $64.7 million and $65.7 million.
The company is also preparing to provide full revenue guidance for 2025 at the start of the year. In the long term, Similarweb aims to achieve financial targets including reaching $400 million to $450 million in revenue with 25% operating margins and $120 million to $135 million in free cash flow. These recent developments indicate a positive growth trajectory for Similarweb.
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