UPDATE: Morgan Stanley Initiates Coverage on Cvent on Market Leader Position

In a report published Tuesday, Morgan Stanley analyst Jennifer Swanson Lowe initiated coverage on

with an Equal-Weight rating. In the report, Morgan Stanley noted, “Cvent is defining an emerging software category with Event Management, which we believe could be a $4-6B market opportunity over time, and is benefitting from network effects between Planners and Venues, which addresses an additional $4B of market opportunity in marketing. The company has shown steady revenue growth of 35-40% over the past three years, with operating margins >13% during that time, a combination of growth and profitability that is unusual in the SaaS space. We expect ~30% growth to persist, but operating margins should decline to ~1% on investments in CY13 and CY14. However, we expect margins to move higher starting in CY15, while investments may yield growth benefits beyond what is currently in our forecast. Cvent trades at 10.1x EV/CY14 sales or 0.37x growth, a slight premium to other recent SaaS IPOs like Marketo and Demandware. We see the stock as fairly valued, although growth could drive shares towards our bull case of $45.” Cvent closed on Friday at $35.61.