Piper Sandler & Co. analyst Brent Bracelin released an industry note Wednesday, highlighting the firm’s top cloud application and analytics company stocks to own for the second half of 2021.
Cloud Industry Overview: The cloud space was highly volatile in the first half of 2021, yet investor sentiment is favorable going into the second half of the year, said Bracelin.
Given the $280 billion valuation, the cloud industry is growing at surprising rates, as shown by June’s 13.2% surge in the firm’s CloudTracker Index, said the analyst.
The analyst named four companies to own going into the second half: Twilio Inc TWLO; Unity Software Inc. U; Avalara Inc AVLR; and Bigcommerce Holdings Inc BIGC.
The Twilio Takeaways: Bracelin noted a $550 price target, highlighting an approximate 40% upside. The primary driver of this bullish sentiment is Twilio’s acquisition of Segment, which positions the company as a one-stop-shop for its customer’s consumer data and engagement needs, he said.
The Unity Software Takeaways: Bracelin’s $150 price target points to an approximate 43% upside. Valuation drivers include Unity’s gains in ad share following April’s IDFA privacy measures, growing momentum for 3D experiences beyond gaming, and its unique data moat, which tracks 50 billion daily user events, according to the note.
Bracelin estimates revenue to quadruple by 2026.
The Avalara Takeaways: Bracelin set a $210 price target with a potential upside of 26%. Enterprise momentum in the $100,000+ customer cohort is growing rapidly at 42% year-over-year, outpacing overall revenue growth, said Bracelin.
He expects modest 2Q revenue growth for 2021 but sees revenue quadrupling by 2026.
The BigCommerce Takeaways: Bracelin highlights a price target of $83, pointing to a potential 20% upside.
Valuation drivers include acceleration of the company’s subscription growth, Bracelin said.
The company has several upside levers, including upwards of $50 million in current and $1 billion in pipeline GMV opportunities, he said.
Evidence of larger enterprise adoption is furthered by BigCommerce’s new integration with Amazon.com Inc.'s AMZN Multi-Channel Fulfillment (MCF) as an additional fulfillment partner, according to another Piper Sandler note issued Wednesday.
TWLO Price Action: Shares of Twilio were down 1.33% to $388.85 Wednesday.
U Price Action: Shares of Unity Software were down 2.03% to $104.49.
AVLR Price Action: Shares of Avalara were up 0.80% to $164.68.
BIGC Price Action: Shares of BigCommerce were up 4.99% to $70.904.
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