Goldman Sachs Sees Talend As A Key Enterprise Provider, But Questions Operating Model

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Goldman Sachs’ Jesse Hulsing believes Talend SA ADR TLND is well positioned to be a “key beneficiary” of big data and cloud adoption.

Hulsing initiated coverage of the company with a Neutral rating and price target of $31.

The analyst believes the stock has 4 percent upside potential, although it is currently fairly valued, “given its lower growth profile, our lower CFO margin forecasts, and what we view as a less efficient model versus peers.”

Growth Drivers

Hulsing also pointed out that one of the core growth drivers for the company was likely to be the sustainability of big data. Big data and cloud subscriptions are expected to grow to 43 percent of Talend’s subscription revenue by FY18, at a three-year CAGR of 91 percent.

Related Link: Amazon's Cloud Competition Has Reason To Worry

While mentioning that the company’s efficiency was improving, the analyst stated, “TLND’s customer acquisition cost ratio has been improving. Sustained improvement would drive upside to our estimates.”

In addition, Hulsing noted that the company’s free cash flow was positive, with a visible path to GAAP profitability by FY18, driven by a capex-light model, annual billings and low SBC.

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Posted In: Analyst ColorInitiationAnalyst RatingsTechGoldman SachsJesse Hulsing
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