On Wednesday, Piper Sandler adjusted its stock price target for OneStream Inc. (NASDAQ: OS), increasing it to $34.00 from the previous $32.00 while keeping an Overweight rating on the stock. The firm's decision came after evaluating OneStream's second-quarter results and the insights gained from the company's performance.
OneStream, which had previously released preliminary figures for the June-ending quarter in mid-July, did not present major surprises in its official Q2 results. However, the firm expressed a positive outlook based on several key factors. Notably, OneStream's guidance for subscription growth in the third quarter is anticipated to exceed 35%, which is higher than the analyst's initial estimate of 30%.
The analyst also highlighted a growing confidence in OneStream's ability to capitalize on broader market opportunities. A significant new deal over $1 million, spurred by the end of support for an SAP product, was cited as evidence of this potential. The deal is seen as part of a larger trend where OneStream could benefit from companies needing to replace their existing systems.
Moreover, the report noted healthy regional growth within the United States, with a slight improvement to 39% from 38% in the previous quarter. This domestic expansion complements OneStream's international strategy, where a recent win in France was mentioned as a key development. The new French client is considered a beachhead that could help bolster OneStream's growth in international markets.
Piper Sandler's maintained Overweight rating implies that the firm expects the stock to outperform the average total return of the stocks in the analyst's industry coverage over the next 12 to 18 months. The positive outlook is grounded in the company's solid performance indicators and strategic growth opportunities.
In other recent news, OneStream Inc. has been the subject of several positive financial assessments following robust Q2 results. The company reported a 36% revenue growth, surpassing analyst estimates, and a significant 44% increase in subscription services.
Operating losses were notably lower than anticipated, marking a substantial improvement from the previous year. Loop Capital maintained a positive stance on OneStream, reiterating a Buy rating with a $35.00 price target.
Similarly, Baird, Guggenheim, Needham, and BofA Securities all raised their price targets for OneStream, maintaining Buy ratings. OneStream's strong performance was also reflected in a 31% growth in Annual Recurring Revenue (ARR) and a year-over-year increase of 41% in Remaining Performance Obligations (RPO).
The company's management team expressed optimism about the future, citing the ongoing digital transformation within corporate finance as an opportunity for growth. These recent developments underscore a positive outlook for OneStream, with various firms expressing confidence in the company's growth trajectory and market position.
However, investors are advised to focus on OneStream's performance relative to the upcoming third quarter of 2024 and the full year's estimates to gauge the company's progress.
InvestingPro Insights
Following Piper Sandler's updated price target for OneStream Inc. (NASDAQ: OS), InvestingPro provides additional context for investors considering the stock. OneStream's market cap stands at $7.1 billion, reflecting investor confidence despite the company not being profitable over the last twelve months. This is further underscored by the stock trading at a high revenue valuation multiple and near its 52-week high, with the price at 96.43% of this peak.
OneStream's revenue growth remains robust, with a 39.93% increase in the last quarter. This growth trajectory aligns with Piper Sandler's optimism about the company's ability to capitalize on market opportunities and expand its subscription base. However, it is important to note that analysts do not expect the company to be profitable this year, which is reflected in the negative operating income margin of -3.55%.
Investors should also consider that OneStream operates with a moderate level of debt, which can impact financial flexibility but may not be a significant concern given the company's revenue growth. With these insights, those interested in a deeper analysis can find additional InvestingPro Tips to guide their investment decisions for OneStream at Investing.com/pro/OS.
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