On Monday, BTIG adjusted its price target for Instructure, Inc. (NYSE:INST) shares, reducing it to $27 from the prior $34, while maintaining a Buy rating on the company's stock. The revision follows recent developments regarding potential acquisition offers for the educational technology company. Reports at the end of last week indicated that a principal bid of around $24 per share is taking the lead among the various proposals.
The analyst from BTIG noted that despite the lack of confirmation that a final deal will be reached, the information from various media sources about the interest from multiple acquirers and the positive response from Instructure's Board and key shareholders suggests that the bid of approximately $24 per share could represent the upper limit of the company's near-term valuation.
The analyst's commentary emphasized the strength of the interest shown in Instructure and the possibility that the company might receive a slightly higher offer, which underpins the decision to reiterate a Buy rating.
Instructure has not made any official announcements regarding the acquisition offers or the potential leading bid. The situation remains fluid, with the company's future valuation dependent on the outcome of ongoing negotiations and the possibility of higher bids emerging.
In other recent news, Instructure, the education technology company, is currently in the spotlight as private equity firms Francisco Partners and KKR are reportedly considering acquiring the company, according to Truist Securities, which maintained a Buy rating on Instructure.
This follows Instructure's strong first quarter, where revenues increased by 20.7% year-over-year to $155.5 million, and subscription and support revenue, which accounts for 93% of total revenue, also saw a significant 22.1% rise.
Following these results, the company raised its fiscal year 2024 revenue outlook to a range of $656.5 million to $666.5 million. Adjusted EBITDA also grew by 34.6% to reach $64.9 million. The company's CEO, Steve Daly, reiterated Instructure's goal of becoming a $1 billion revenue company by 2028, with plans to expand its platform offerings and secure new customers.
In addition to these financial highlights, the recent acquisition of Parchment is performing well and contributing to positive traction. The company's strong leadership position in the education sector, along with its consistent trade at a multiple of future revenues, underscores its ongoing appeal to potential buyers. These recent developments provide a snapshot of Instructure's current market situation and potential future trajectory.
InvestingPro Insights
As Instructure, Inc. navigates through acquisition offers, the InvestingPro data provides a snapshot of the company's financial health and market performance. With a market capitalization of $3.34 billion and a significant revenue growth of 13.5% in the last twelve months as of Q1 2024, the company is showing promising signs of expansion. Despite the challenges of not being profitable over the last twelve months and facing a high revenue valuation multiple, analysts remain optimistic about Instructure's potential. This is supported by a strong gross profit margin of 65.93%, indicating efficient operations and a robust business model.
InvestingPro Tips suggest that while Instructure's stock has faced a decline over the last week, with a 1-week price total return of -8.4%, the company has experienced a strong return over the last three months, with a 19.4% increase. This could indicate resilience and the capacity for recovery in the short term. Furthermore, analysts have revised their earnings upwards for the upcoming period, reflecting confidence in the company's future performance. Notably, the company does not pay a dividend, which may be a consideration for income-focused investors.
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