On Wednesday, RBC Capital adjusted its price target for Smartsheet Inc . (NYSE: NYSE:SMAR) shares, raising it to $56.50 from the previous target of $51.00. The firm maintained a Sector Perform rating on the stock. This adjustment follows Smartsheet's announcement that it has entered into a definitive agreement to be acquired by private equity firms Blackstone (NYSE:BX) and Vista Equity Partners.
The acquisition deal values Smartsheet at $56.50 per share in cash, translating to an equity value of approximately $8.4 billion. This offer is an 8% premium over the stock's closing price on Monday and a 41% premium compared to the 90-day volume-weighted average price. The transaction is also valued at a 6.1x enterprise value to next twelve months (NTM) revenue multiple and 29x NTM free cash flow (FCF).
RBC Capital's commentary on the acquisition highlighted the premium offered as being "appropriate" due to Smartsheet's limited total addressable market (TAM) and the highly competitive nature of the market in which it operates. The analyst pointed out that the acquisition price reflects these market conditions.
The deal is a significant move for Smartsheet, a company specializing in cloud-based platforms for work management and automation. Blackstone and Vista Equity Partners' acquisition will provide Smartsheet with additional resources and potential for growth in its sector.
Investors and market watchers will be keeping a close eye on Smartsheet's stock performance and any further developments regarding the acquisition process. The announcement has already had a notable impact on Smartsheet's market valuation and will likely influence the company's financial trajectory in the near future.
In other recent news, Smartsheet Inc. has agreed to a private acquisition by Vista Partners and Blackstone, a deal valued at $8.4 billion. This transaction has led to changes in stock ratings, with Canaccord Genuity, William Blair, and JPMorgan adjusting their ratings to align with the acquisition price of $56.50 per share. In addition to these major developments, Smartsheet reported 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.
Simultaneously, the company announced a change in its executive structure, with Chief Operating Officer Stephen Branstetter transitioning to an advisory role.
InvestingPro Insights
In light of RBC Capital's price target adjustment for Smartsheet Inc. (NYSE: SMAR) and the company's recent acquisition news, a peek at the latest InvestingPro data provides additional context for investors. Smartsheet holds a market capitalization of $7.71 billion, which aligns closely with the equity value of the acquisition deal. Despite a negative P/E ratio indicating that the company is not currently profitable, Smartsheet's gross profit margin stands impressively at 81.61% for the last twelve months as of Q1 2023, highlighting its strong ability to control costs relative to revenue.
InvestingPro Tips suggest that Smartsheet's net income is expected to grow this year, with 10 analysts having revised their earnings upwards for the upcoming period. This optimism is further substantiated by the company's revenue growth of over 20% in the same timeframe. Additionally, Smartsheet's stock has been performing robustly, with a 30.99% return over the past three months and trading near its 52-week high, reflecting a positive sentiment among investors.
For those looking to delve deeper into the company's prospects, InvestingPro offers additional insights, including more tips on Smartsheet's financial health and future expectations. To explore these further, investors can visit https://www.investing.com/pro/SMAR, where over 10 additional InvestingPro Tips are available, providing a comprehensive analysis of the company's performance and potential.
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