Goldman Sachs’ Jesse Hulsing believes Apptio Inc APTI is well positioned to deliver sustained growth, given the company’s leadership position in the market and a “relatively benign” competitive environment.
Hulsing initiated coverage of the company with a Neutral rating and price target of $21.
Limited Upside
The analyst believes the stock could have 2 percent upside potential and is fairly valued at present, given Apptio’s lack of efficiency and “corresponding relative profitability and cash flow generation.”
Hulsing mentioned that among the two core growth drivers for the company has been new customers among the Fortune 1000.
Growth Drivers
“The company has made changes to its products and selling motion which should lead to a higher mix of growth from smaller enterprises and the installed base,” the analyst stated.
Another growth driver could be improving efficiency. Hulsing noted that Apptio’s customer acquisition cost was improving and sustained improvement could be the key to achieving the estimates and turning free cash flow positive in FY17.
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