On Friday, Citi raised the price target for Smartsheet Inc . (NYSE:SMAR) shares to $63.00, up from the previous target of $55.00. The firm has retained its Buy rating on the company's stock. The adjustment follows recent reports of merger and acquisition discussions involving Smartsheet.
Smartsheet reported a revenue beat, albeit softer than typical, at 0.8% compared to 1.8% in the previous quarter. This was attributed to a shift in services towards partner involvement. Despite this, the company saw a robust beat-and-raise in subscription revenue, with the annual recurring revenue (ARR) guidance experiencing an uptick.
The enterprise segment of Smartsheet continues to show strong momentum, and there are early positive signs from recent pricing changes. However, small and medium-sized business (SMB) sectors faced challenges, with churn rates increasing to 4.5%. Overall, trends remained relatively aligned with expectations, with ARR and billings outperforming.
Citi's revised price target of $63 is based on a 6.4x multiple of the company's expected fiscal year 2026 enterprise value to revenue. This reassessment reflects the firm's recognition of Smartsheet's ongoing enterprise growth and promising subscription revenue performance.
In other recent news, Smartsheet Inc. has been the subject of merger and acquisition discussions, according to Canaccord Genuity. The firm maintained a Buy rating on the company and increased the price target to $60. This follows Smartsheet's strong Q2 performance, where it reported an adjusted earnings per share of $0.44, surpassing analyst estimates of $0.29, and revenue of $276.4 million, a 17% YoY increase. The company's annualized recurring revenue (ARR) also grew 17% YoY to $1.093 billion.
For the third quarter, Smartsheet expects revenue between $282 million and $285 million, representing a YoY growth of 15% to 16%. The company also raised its full-year outlook, now projecting revenue of $1.116 billion to $1.121 billion. Additionally, Smartsheet's improved profitability was evident in its record free cash flow of $57.2 million, or 21% of total revenue. These developments signal recent growth and potential future opportunities for the company.
InvestingPro Insights
Following Citi's recent price target upgrade for Smartsheet Inc. (NYSE:SMAR), an examination of the latest InvestingPro data and tips can provide additional context for investors considering the company's shares. Smartsheet holds a promising position with more cash than debt on its balance sheet, which is a reassuring sign for investors looking for financial stability in their investments. Additionally, analysts are optimistic about the company's future profitability, predicting that Smartsheet will be profitable this year.
From a financial metrics standpoint, Smartsheet's revenue growth remains strong with a 20.16% increase over the last twelve months as of Q2 2025. This is complemented by an impressive gross profit margin of 81.61%, which underscores the company's ability to maintain profitability on its products and services. Despite the company not being profitable over the last twelve months, its stock has been trading near its 52-week high, which may indicate investor confidence in its growth prospects. However, it's important to note that Smartsheet is trading at a high Price/Book multiple of 10.18.
Investors interested in Smartsheet's performance and future outlook will find additional InvestingPro Tips on the platform, including insights into the company's low price volatility and the absence of dividend payments to shareholders. For a deeper dive into Smartsheet's financials and expert analysis, there are 9 additional InvestingPro Tips available, which can be accessed through the InvestingPro platform.
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