On Wednesday, Goldman Sachs (NYSE:GS) began coverage on OneStream Inc. (NASDAQ:OS), assigning the stock a Buy rating and setting a price target of $37.00. According to InvestingPro data, the stock currently trades at $30.45, with analyst targets ranging from $30 to $39, suggesting potential upside.
The company maintains a strong balance sheet with more cash than debt, one of several key insights available in the comprehensive Pro Research Report. The firm highlighted the significant transformation in the responsibilities of the Office of CFO in recent years, which has remained one of the most under-digitized areas within organizations.
OneStream's unified Corporate Performance Management (CPM) platform is seen as a major factor in creating a durable demand opportunity. This stems from companies' growing preference for horizontal, extensible, and innovative platforms that can provide essential functionality. The need for such platforms is driven by the desire to move away from legacy systems, effectively leverage evolving technology, and streamline software costs in a market with many point solution vendors.
According to Goldman Sachs, OneStream's consistent revenue growth and high retention rates since the fiscal year 2023, despite a challenging operating environment for software companies, are indicative of the robustness of the company's core CPM offerings.
The company generated revenue of $459.5 million in the last twelve months, maintaining a healthy gross profit margin of 63.9%. InvestingPro analysis reveals six analysts have revised their earnings upward for the upcoming period, signaling growing confidence in the company's trajectory. The firm suggests that these factors, combined with multiple avenues available to management for driving margin expansion over time, and the company's leading innovation capabilities, offer strong valuation support for OneStream when compared to its peers.
The analyst's remarks underscore the potential for OneStream's platform to meet the evolving needs of modern CFOs and their offices. With an emphasis on the company's ability to navigate through tough market conditions and its prospects for continued growth and margin improvement, the initiation of coverage by Goldman Sachs presents a positive outlook for OneStream Inc. in the competitive software industry.
While currently showing a strong current ratio of 2.45, InvestingPro analysis indicates the stock may be trading above its Fair Value, with additional insights and detailed valuation metrics available through the platform's exclusive Pro Research Report.
In other recent news, OneStream Inc. has announced a proposed underwritten public offering of 15 million shares of its Class A common stock. The offering is a mix of over 9 million shares from selling stockholders and nearly 6 million shares from OneStream. The company intends to use the proceeds from its shares to purchase LLC units from KKR Dream Holdings LLC, keeping the current count of outstanding shares and LLC units post-offering. The offering is led by Morgan Stanley (NYSE:MS), J.P. Morgan, and KKR, with several other financial institutions participating.
In the same vein, OneStream has been the focus of positive financial assessments from several firms. Piper Sandler maintained an Overweight rating while raising the price target to $37, following OneStream's recent quarter results that showed a 4% top-line beat and a $1 million increase in the forecast for the fourth quarter. The company's subscription growth rate hit 39%, surpassing the estimated 35%, and another seven-figure contract was secured.
BMO (TSX:BMO) Capital initiated coverage with an Outperform rating, emphasizing OneStream's potential for market share growth, robust capabilities in data management, consolidation, and artificial intelligence/machine learning. The firm anticipates OneStream to surpass conservative near-term financial estimates, which could positively impact both revenue and earnings.
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