Wunderlich Lowers Tableau's Price Target To $656, Still Buying The Stock

Tableau Software Inc DATA reported its 1Q revenue and EPS ahead of expectations. Wunderlich’s Rob Breza reiterated a Buy rating for the company, while lowering the price target from $75 to $65.

Outperformance In 1Q

Tableau Software reported its 1Q revenue at $171.7M, marginally higher than the consensus of $164.0M. EPS came in at $0.00, significantly above the consensus of ($0.10). Product license revenue was reported at $96.4M, representing 14 percent y/y growth, beating expectation of $94.0M.

“DATA's revenue outperformance in 1Q was driven by strong customer adoption as the company added over 3,500 new customer accounts, bringing the total count to more than 42K,” analyst Rob Breza wrote.

Looking Ahead

Following the blowup in 4Q15, management has refocused on solving issues related to sales productivity, the increasingly difficult competitive landscape, and a difficult IT spending environment, Breza noted.

In order to boost sales productivity, Tableau Software has lowered its FY16 hiring plan. The money is instead being used to invest in training, demand generation, and lead flow. Although it is still early, the changes being made seem to be in the right direction.

Estimates Raised

The analyst believes the company would be able to sustain its premium growth rates. The revenue and EPS estimates for 2016 have been raised from $841.7M to $845.2M and from $0.34 to $0.52, respectively. The revenue and EPS estimates for 2017 have been raised from $1,102.5M to $1,106.0M and from $0.72 to $0.84, respectively.