Anaplan's IPO Concerns Have Subsided, KeyBanc Says In Upgrade

Software company Anaplan Inc PLAN proved in its first-quarter report that any initial concerns at the time of its late 2018 IPO havwe now been addressed, according to KeyBanc Capital Markets. 

The Analyst

Brent Bracelin upgraded Anaplan from Sector Weight to Overweight with a new $57 price target.

The Thesis

Anaplan's May 28 first-quarter report represents the third consecutive quarter of accelerating billings, Bracelin said in the Thursday upgrade note. (See his track record here.) 

In the first quarter, the company showed 58-percent billings growth along with a net expansion rate north of 120 percent, the analyst said. These metrics should ease investor concerns related to sales execution problems the company faced several quarters ago, he said. 

Anaplan management told KeyBanc that the drivers that contributed to sales productivity could be repeatable and could be leveraged to build out a "robust" demand pipeline, Bracelin said.

The potential growth drivers include increasing contributions from partners like Deloitte; additional penetration within the G2K, which stands at just 12.5 percent; and further penetration within existing customers given the "impressive" NRR above 120 percent, the analyst said. 

KeyBanc's new $57 price target is based on a discounted cash flow model applying a multiple of 41 times 2023 estimated EV/FCF discounted back by 15 percent. This implies an EV/S multiple of 14.8 times 2021 estimates, which is a "warranted" premium given strong prospects stemming from the NRR above 120 percent, Bracelin said. 

Price Action

Anaplan shares were trading higher by 1.2 percent at $47.95 at the time of publication Friday. 

Related Links:

Anaplan's IPO: What You Need To Know

Benzinga's Top Upgrades, Downgrades For June 7, 2019

Photo courtesy of Anaplan.