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Coupa Software Offers Growth Momentum And Healthy Results, But At A Pricey Valuation

Coupa Software Offers Growth Momentum And Healthy Results, But At A Pricey Valuation

Shares of Coupa Software Inc (NASDAQ: COUP) were trading higher by more than 3 percent early Tuesday morning in reaction to the company's better-than-expected first-quarter earnings report. However, not all among the Street found the report encouraging enough to take a bullish stance.

Barclays' Raimo Lenschow maintains an Equal-Weight rating on Coupa's stock with a price target boosted from $28 to $32, which implies downside from current levels.

Expensive Stocks Despite A Good Quarter

Coupa's earnings report contained several positive metrics, including a 13-percent beat to billings, which is seeing strong momentum and high-profile wins with Scotia Bank, Pearson, and an unnamed Fortune 500 financial services firm.

Other encouraging aspects of the report include a positive operating cash flow of $7.2 million, new strategic partnerships with Amazon Business, the addition of artificial intelligence capabilities from the acquisition of Spend360 and new product launches like Service Maestro.

However, the stock remains expensive on a valuation basis versus its peers.

Coupa's stock is trading at 9.5x EV/CY18E, which is a premium to Workday Inc (NYSE: WDAY) and ServiceNow Inc (NYSE: NOW) — both of which trade at a 8.2x multiple, the analyst explained. Meanwhile, Coupa operates at a less scale compared to its peers, which calls into question how much more room the stock has to move higher.

As such, the analyst's price target is based on a multiple of 8.0x, which is roughly in line with its peers.

At last check, shares of Coupa were down 4.89 percent at $34.60.

Related Links:

10 Stocks To Watch For June 6, 2017

Earnings Scheduled For June 6, 2017

Latest Ratings for COUP

Jan 2021KeyBancMaintainsOverweight
Dec 2020Canaccord GenuityMaintainsBuy
Dec 2020Raymond JamesMaintainsOutperform

View More Analyst Ratings for COUP
View the Latest Analyst Ratings


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