Goldman Positive On Sailpoint's Technology And Roadmap, But Sees Valuation As A Deterrent

Sailpoint Technologies Holdings Inc SAIL, a provider of on-premises or cloud-based identity and access management solutions, has a strong competitive positioning but valuation prompted an analyst at Goldman Sachs to stay on the sidelines.

The Analyst

Analyst Gabriela Borges initiated coverage of Sailpoint with a Neutral rating and a 12-month price target of $32.

The Thesis

Sailpoint's competitive positioning has several structural positives, Borges said in a Tuesday note.

Borges expects the growth of identity governance budgets to exceed the security/enterprise software budget, primarily due to increased regulation and complexity. The analyst also noted the company has built a "more dynamic and scalable platform" having superior win rates, relative to incumbents.

"We believe SailPoint's focus on the business user and its rich set of integrations with back end systems creates stickiness and a high barrier to entry," the analyst said.

The analyst sees the company's new products creating a cross-sell opportunity, possibly driving a much bigger total addressable market than what's currently forecast by third parties. Borges expects SecurityIQ and IdentityAI, which are still early in their adoption, to drive incremental growth over the next three years.

Despite being positive on the company's technology and roadmap, Goldman attributed its neutral stance on the stock's valuation. The stock is trading at 23 times its 2019 normalized EPS estimate compared to the S&P 500 Index, which is trading at a multiple of 17 times.

The Price Action

Sailpoint shares have gained about 100 percent in the year-to-date period. The stock traded around $29.24 at time of publication.

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