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Needham Upgrades Cornerstone OnDemand To Strong Buy

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In a report published Wednesday, Needham analyst Scott Berg upgraded the rating on Cornerstone OnDemand, Inc (NASDAQ: CSOD) from Buy to Strong Buy, while raising the price target from $34 to $40.

Cornerstone OnDemand is a market leader in the Human Capital Management (HCM) software space. Berg believes that the company is well positioned in a space that is "seeking new leadership."

In the report Needham noted the factors that could benefit the company:

  • Elevated spending levels for the company's core Talent Management applications
  • Strong product vision
  • Weakening competition
  • Shifting customer purchasing preferences

These factors could come together to create "an attractive investment opportunity for growth investors," Berg wrote, while adding, "Our checks indicate that fundamentals are improving and that the "short thesis" remains a hypothetical several years off, if ever in our view."

Berg enumerated the investment positives as:

  1. Spending on Talent Management applications remaining robust in 2015 and 2016
  2. Billings upside likely in 2015 versus current consensus
  3. The shifting of Talent Management toward a suite
  4. Robust revenue growth, boosted by large up-sell opportunity
  5. "We prefer subscription-based revenue models given better visibility"

The EPS estimate for 2015 has been marginally reduced from $(0.29) to $(0.30), while that for 2016 has been raised from $(0.29) to $(0.22).

Latest Ratings for CSOD

Jul 2017Credit SuisseUpgradesNeutralOutperform
Jul 2017NeedhamUpgradesBuyStrong Buy
Jun 2017BarclaysDowngradesEqual-WeightUnderweight

View More Analyst Ratings for CSOD
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Posted-In: NeedhamAnalyst Color Upgrades Price Target Analyst Ratings


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