Wall Street Likes Coupa Software After Revenue, Sales Beats

September 4, 2019

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Courtesy of Benzinga

Wall Street Likes Coupa Software After Revenue, Sales Beats

Investors continued to boost shares of Coupa Software Inc (NASDAQ: COUP) on Wednesday after it beat the Street consensus on revenue on stronger-than-expected sales. As buyers bid the stock up by double-digit percentage points, several sell-side analysts boosted price targets on the SaaS platform company’s stock.

Coupa reported revenue of $95.1 million, up more than 50% year-over-year as billings trounced Street expectations after a key contribution from the acquisition of contract management software company Exari.

The Analysts

Morgan Stanley’s Stan Zlotsky kept an Equal-Weight rating on the stock but increased the price target from $122 to $145.

Bank of America’s Brad Sills reiterated a Buy rating and a top pick label for Coupa and raised the price target from $168 to $178.

Wedbush analyst Steve Koenig reiterated an Outperform rating and raised the target price from $168 to $180.

KeyBanc’s Brent Bracelin raised the target price on the stock from $171 to $178 and maintained an Overweight rating.

The Theses

Coupa’s revenue beat of $10 million, its largest ever, was also attributable in part to its first federal government client, noted Koenig, as Coupa began providing services to the U.S. Postal Service. But that was only part of a broader story of momentum, he said.

“We expect sales momentum to continue throughout FY20 and FY21, driven by multi-product adoption, international expansion, and growth in partner-influenced sales,” Koenig wrote in a note. “Also, COUP is demonstrating good unit economics, suggesting long-term margin potential.”

Bracelin echoed the bullishness, citing “strong leadership, an impressive track record of execution, and several untapped growth levers that help justify a premium valuation in core $56 billion total addressable market.”

Coupa Pay

Bracelin also likes the strong forward look, especially what he sees as long-term opportunity with the company’s recently announced B2B payments platform called Coupa Pay.

Sills thinks Coupa could continue to generate 35% revenue growth or more via share gains in what is a large spending applications market and also cited the promise of new revenue from Coupa Pay.

“We believe Coupa possesses a number of defensible competitive advantages,” Sills wrote, citing a broad product offering, a large base of mid-size customers, a strong supplier network and easy-to-use products.

Zlotsky wrote in praise of Coupa’s billings and revenue beats and operating margin performance, and thinks the growth should continue to be strong. Zlotsky also noted the large window for opportunity in the business, “which sets up a long runway of sustainable 20%+ growth, in our view.”