On Monday, TD Cowen exhibited confidence in Procore Technologies , Inc (NYSE:PCOR), as the firm increased the construction management software company's price target to $70.00 from the previous $65.00. The firm reiterated its Buy rating on the stock.
The adjustment comes ahead of Procore's third-quarter earnings report, which is scheduled for October 30. TD Cowen anticipates a modest revenue beat and expects the company to raise its guidance. The focus is likely to be on the go-to-market (GTM) strategy changes that Procore has implemented. Analysts at TD Cowen are optimistic about the potential for limited disruption from these changes and are looking forward to seeing early positive results.
Furthermore, during Procore's investor day in November, analysts are expecting the company to provide its fiscal year 2025 guidance, which could alleviate some concerns hanging over the stock. According to TD Cowen, the current valuation of Procore at approximately 6 times enterprise value to sales (EV/Sales) reflects low expectations from the market.
The analyst also noted that Procore's stock is trading at a roughly 50% discount compared to its vertical market peers, which they consider to be excessively wide. The price target increase to $70 reflects a belief that this gap should narrow, although the analyst expects the stock to remain range-bound until the benefits of the GTM changes materialize next year.
In other recent news, Procore Technologies reported a significant 24% year-over-year revenue increase in the second quarter of 2024, reaching $284 million. The company has set an ambitious goal to exceed $1 billion in full-year revenue. Amid these developments, various analyst firms have maintained their ratings on Procore.
Barclays maintained an Equalweight rating, anticipating a 13% increase in cRPO as Procore navigates a sales transition. BMO Capital Markets expects modest improvements in third-quarter revenue and EBIT margin, maintaining an Outperform rating.
Baird initiated coverage with an Outperform rating, recognizing Procore's leadership in construction management. DA Davidson maintained a Neutral stance, expressing cautious optimism about the current indicators in the construction sector. KeyBanc reiterated its Overweight rating, expressing confidence in Procore's future performance. .
InvestingPro Insights
Procore Technologies' financial metrics and InvestingPro Tips offer additional context to TD Cowen's optimistic outlook. The company's revenue growth remains strong, with a 27.83% increase over the last twelve months as of Q2 2023. This aligns with TD Cowen's expectation of a potential revenue beat in the upcoming earnings report.
InvestingPro Tips highlight that Procore holds more cash than debt on its balance sheet, which could provide financial flexibility as the company implements its new go-to-market strategy. Additionally, 11 analysts have revised their earnings upwards for the upcoming period, suggesting broader market confidence in Procore's near-term performance.
However, investors should note that Procore is currently trading at a high revenue valuation multiple, which may already factor in some of the positive expectations. The company's impressive gross profit margin of 82.59% underscores its operational efficiency, potentially supporting TD Cowen's view on the stock's valuation gap closing over time.
For readers seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Procore Technologies, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.