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Guidewire (GWRE) Surges 26.2% YTD: Will the Trend Continue?
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Guidewire Software (GWRE - Free Report) is witnessing healthy momentum this year so far. The shares of the company have gained 26.2% year to date compared with the sub-industry’s growth of 14.1%. The company is a leading provider of software solutions for property and casualty (P&C) insurers.
The company's solutions aid in reducing risk via increased productivity, bringing speed to market, digital engagement and simplifying IT infrastructure. Further, the company also offers Guidewire InsuranceSuite and Guidewire InsuranceNow, which provide solutions to support the entire insurance lifecycle.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #2 (Buy) stock.
The company’s performance is gaining from higher revenue growth across the subscription and support business segment. In the third quarter, the subscription and support revenues soared 24% from the year-ago quarter’s levels to $107.5 million, owing to higher subscription revenues.
The company’s focus on enhancing the Guidewire Cloud platform with new capabilities is expected to boost sales of subscription-based solutions. Guidewire Cloud continues to gain momentum with eight cloud deals in the fiscal third quarter.
The company’s acquisition of Cyence has also allowed it to provide an entire life cycle to the insurance products, from designing to transaction management. The addition of HazardHub is likely to have bolstered Guidewire’s portfolio, expanding the company’s presence in the P&C market.
Going ahead, the company is likely to benefit as insurers modernize their legacy mainframe systems and replace previously modernized on-prem systems. For fiscal 2023, the company expects total revenues between $890 million and $900 million. ARR is projected to be in the range of $745-$755 million.
GWRE’s fiscal 2023 and 2024 revenues are anticipated to rise 10.3% and 10.1% year over year, respectively. The company’s earnings are expected to increase 82.4% and 819.1% on a year-over-year basis in fiscal 2023 and 2024, respectively.
Apart from its solid fundamentals, the company is prone to a few risks. The company’s products and services are only meant for P&C insurers. This leads to a lack of product diversification. Also, frequent acquisitions made by the company lead to rising integration risks.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings per share (EPS) has increased 12.6% in the past 60 days to $4.03.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 27.2% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 10% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 6.3% in the past 60 days to $2.86.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 63.7% in the past year.
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Guidewire (GWRE) Surges 26.2% YTD: Will the Trend Continue?
Guidewire Software (GWRE - Free Report) is witnessing healthy momentum this year so far. The shares of the company have gained 26.2% year to date compared with the sub-industry’s growth of 14.1%. The company is a leading provider of software solutions for property and casualty (P&C) insurers.
The company's solutions aid in reducing risk via increased productivity, bringing speed to market, digital engagement and simplifying IT infrastructure. Further, the company also offers Guidewire InsuranceSuite and Guidewire InsuranceNow, which provide solutions to support the entire insurance lifecycle.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #2 (Buy) stock.
The company’s performance is gaining from higher revenue growth across the subscription and support business segment. In the third quarter, the subscription and support revenues soared 24% from the year-ago quarter’s levels to $107.5 million, owing to higher subscription revenues.
The company’s focus on enhancing the Guidewire Cloud platform with new capabilities is expected to boost sales of subscription-based solutions. Guidewire Cloud continues to gain momentum with eight cloud deals in the fiscal third quarter.
The company’s acquisition of Cyence has also allowed it to provide an entire life cycle to the insurance products, from designing to transaction management. The addition of HazardHub is likely to have bolstered Guidewire’s portfolio, expanding the company’s presence in the P&C market.
Going ahead, the company is likely to benefit as insurers modernize their legacy mainframe systems and replace previously modernized on-prem systems. For fiscal 2023, the company expects total revenues between $890 million and $900 million. ARR is projected to be in the range of $745-$755 million.
GWRE’s fiscal 2023 and 2024 revenues are anticipated to rise 10.3% and 10.1% year over year, respectively. The company’s earnings are expected to increase 82.4% and 819.1% on a year-over-year basis in fiscal 2023 and 2024, respectively.
Apart from its solid fundamentals, the company is prone to a few risks. The company’s products and services are only meant for P&C insurers. This leads to a lack of product diversification. Also, frequent acquisitions made by the company lead to rising integration risks.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Woodward (WWD - Free Report) , Aspen Technology (AZPN - Free Report) and Badger Meter (BMI - Free Report) . Woodward and Badger Meter presently sport a Zacks Rank #1 (Strong Buy), whereas Aspen Technology currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings per share (EPS) has increased 12.6% in the past 60 days to $4.03.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 27.2% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 10% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 6.3% in the past 60 days to $2.86.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 63.7% in the past year.