- CreditSuisse Analyst Fred Lee reiterated underperform on Coupa Software Inc COUP with a target price of $60.
- Vista in talks to acquire COUP, Bloomberg reports.
- Vista’s founder and CEO recently (August 22) spoke about the company’s approach to valuation in this market.
- He stressed that the company is EV/R/G focused and below the long-term historical average of 0.41.
- Using current growth rates in the mid to high teens, the stock price would be in the $45 range.
- The average EV/LTM Rev multiple that Vista has paid over the past two years was 9.7x. Vista’s historical M&A range would imply a takeout range of $60 to $70.
- Raymond James Analyst Brian Peterson noted that Coupa was repeatedly mentioned as a SaaS asset that would be attractive to PE buyers. He’s long viewed the asset as a potentially attractive takeaway candidate.
- That’s largely because Coupa has already built a platform that has fostered merger-and-acquisition synergies and could be a vehicle for more mergers-and-acquisitions beyond its current business spend management (BSM) offering.
- He also notes that Coupa hasn’t been as aggressive as some software vendors when it comes to raising prices or driving a back-to-base sales move and prioritizing new logo acquisitions.
- In a tighter macro, he believes the former could become more critical to the growth algorithm, which might be easier to do as a private company.
- While Coupa also has clear FCF margins, any PE takeout would have to factor in COUP’s roughly $2.2 billion in gross convertible debt, with its calculations suggesting around $1.3 billion in net debt.
- Regarding a potential takeaway multiple, he pointed to recent takeaway offers for AVLR and PING, which advocated a takeaway price of $68-$80.
- Price promotion: COUP shares closed up 6.38% at $62.69 on Friday.
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