Talend Turns Favorable At Goldman Sachs

Goldman Sachs upgraded Talend SA ADR TLND to Buy from Neutral, saying the company is a key beneficiary of analytics moving to the cloud, and the recent pullback in the shares offers a buying opportunity.

“[W]e view TLND as uniquely positioned to benefit due to 1) a technology approach that allows users to take advantage of commodity processing and elasticity, 2) a pricing model that is not tied to core growth, which we believe pairs well with a shift to an increase in ephemeral workloads,” analyst Jesse Hulsing wrote in a note.

Hulsing expects Talend to sustain its 33 percent three-year revenue CAGR through FY18, as big data and cloud-related subscription revenue is projected to increase 151 percent/73 percent/61 percent in FY16/FY17/FY18 and represent 27 percent/36 percent/43 percent of the subscription revenue mix.

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“When coupled with a FCF positive model and a path to GAAP profitability, we view this growth as undervalued at ~4.5x EV/sales,” Hulsing continued.

Shares of TLND fell 14 percent over the last month, likely in part because of GBP exposure as the about 10 percent of its revenue is GBP-denominated, generates about 50 percent of revenue from EMEA.

But, the analyst believes the pullback is overdone and would buy the weakness.

ADRs of Talend closed Thursday’s regular trading at $24.29. Hulsing’s price target of $31 implies an upside potential of 37 percent.

Full ratings data available on Benzinga Pro.