👀 Ones to watch: Undervalued stocks to buy before they report Q3 earningsSee Undervalued Stocks

Smartsheet stock downgraded on acquisition deal with Blackstone and Vista - UBS

EditorEmilio Ghigini
Published 09/26/2024, 03:36 AM
SMAR
-


On Thursday, UBS downgraded Smartsheet Inc . (NYSE:SMAR) stock from Buy to Neutral, adjusting the price target to $56.50 from the previous $61.00. This change comes in response to Smartsheet's recent announcement of an acquisition agreement with Blackstone (NYSE:BX) and Vista Equity Partners.

The deal values the company at approximately $8.4 billion, or $56.50 per share, which is a roughly 41% premium over the share price from mid-July before reports of a potential acquisition emerged.

The acquisition is slated for completion in the fourth quarter of fiscal year 2025. UBS has revised its stance on Smartsheet's stock, shifting to a Neutral rating based on the expectation that the acquisition will proceed as planned. The new price target reflects the agreed acquisition price per share.

Smartsheet, a company specializing in cloud-based work management, has agreed to a buyout that significantly exceeds its share price prior to acquisition speculations. The offer from Blackstone and Vista Equity Partners comes after a period of reported interest in the company, culminating in the substantial premium offered to current shareholders.

The transaction is anticipated to finalize in the latter part of 2025, marking a significant milestone for Smartsheet. UBS has responded to this development by adjusting its investment outlook, aligning the new price target with the terms of the acquisition agreement.

Investors and market observers now turn their attention to the upcoming closing of the deal, which represents a notable consolidation within the cloud software sector. The agreed price of $56.50 per share will be the figure to watch as Smartsheet transitions to private ownership under the guidance of Blackstone and Vista Equity Partners.

In other recent news, Smartsheet Inc. has entered into a definitive agreement to be acquired by private equity firms Blackstone and Vista Equity Partners in a deal valued at approximately $8.4 billion. The acquisition price is set at $56.50 per share, reflecting an equity value of Smartsheet.

This significant development has led to changes in stock ratings. RBC Capital raised its price target for Smartsheet to $56.50, while Canaccord Genuity, William Blair, and JPMorgan adjusted their ratings to align with the acquisition price.

In addition to the acquisition, Smartsheet announced a 17% increase in revenue for the second quarter of fiscal year 2025, totaling $276.4 million, and a similar rise in its annualized recurring revenue, reaching $1.093 billion. These are notable developments in the company's financial performance.

Furthermore, Smartsheet's Chief Operating Officer, Stephen Branstetter, has transitioned to an advisory role as part of a restructuring in the company's executive structure. These recent developments mark a new phase for Smartsheet as it transitions from a public entity to a privately held company under the ownership of Blackstone and Vista Equity.


InvestingPro Insights


As Smartsheet Inc. (NYSE:SMAR) prepares for its acquisition by Blackstone and Vista Equity Partners, the latest metrics from InvestingPro paint a comprehensive picture of the company's financial health. With a market capitalization of $7.69 billion, the company is trading near its 52-week high, with a price that's 99.57% of this peak. This aligns closely with the acquisition price of $56.50 per share, indicating market confidence in the deal's completion.

InvestingPro Tips highlight that Smartsheet holds more cash than debt on its balance sheet and is expected to see net income growth this year. These factors may have contributed to the attractiveness of the acquisition. Additionally, 11 analysts have revised their earnings upwards for the upcoming period, reflecting optimism in Smartsheet's financial trajectory. For those interested in a deeper analysis, there are more InvestingPro Tips available, which can be found on the Smartsheet page at InvestingPro.

Despite not being profitable over the last twelve months, the company has shown significant returns, with a price total return of 43.49% over the past year. The gross profit margin remains impressive at 81.61%, signaling strong operational efficiency. These key metrics and insights from InvestingPro provide investors with a clearer understanding of Smartsheet's value as it enters a new chapter.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.