Qualtrics Shares Soar on Better-Than-Expected Full-Year Revenue Outlook; Target Price $52

Qualtrics International, which designs and develops application software, forecasts better-than-expected revenue in the first quarter and full-year ending December 31, 2021, sending its shares up over 7% on Tuesday.

The company, which is the leader in customer and employee experience and creator of the experience management category, forecasts total revenues between $226 and $228 million for its first quarter ending March 31, 2021 and in the range of $950 and $954 million. That was higher than the Wall Street consensus of $223 million and $943.3 million, respectively.

Following this optimism, Qualtrics shares ended 7.34% higher at $37.14 on Tuesday.

Total revenues for the fourth quarter were $213.6 million, up 24% year-over-year. Subscription revenues for the fourth quarter were $160.4 million, up from $120.5 million one year ago, an increase of 33% year-over-year.

“A ramp to 46% YoY billings growth in Q4 and 35% cRPO-based bookings growth in FY20 cast an initial 25% revenue growth target for FY21 in a conservative light. Easier comps into 1H21, set up XM for beat and raise quarters, which should help sustain a growth adjusted multiple ahead of SaaS peers,” said Keith Weiss, equity analyst at Morgan Stanley.

“While an FY21 outlook that was above our previous estimates drives higher full-year revenue growth in FY21, our revenue forecasts in the out years remain largely unchanged with an 18% CAGR from CY20 to CY31. Similarly, management’s full-year FY21 operating margin guidance for (4%) to (5%) came in modestly above consensus at (6%), and therefore we raise our operating margins in the out years slightly, yielding $1,656M FCF in CY31 (vs. $1,623M prior).”

Qualtrics Stock Price Forecast

Seventeen analysts who offered stock ratings for Qualtrics International in the last three months forecast the average price in 12 months of $52.13 with a high forecast of $61.00 and a low forecast of $44.00.

The average price target represents a 40.36% increase from the last price of $37.14. Of those 17 analysts, nine rated “Buy”, eight rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $44 with a high of $75 under a bull scenario and $23 under the worst-case scenario. The firm gave an “Equal-weight” rating on the software company’s stock.

Several other analysts have also updated their stock outlook. Barclays lowered the target price to $39 from $45. JP Morgan cut the target price to $50 from $55. BofA Global Research gave a neutral rating and $50 price objective. Oppenheimer set outperform rating and $60 target price. Raymond James gave an outperform rating and issued the price target of $55.

Moreover, Truist Securities gave a buy rating and set the target price of $60. BMO initiated with market performance rating and gave the target price of $52. Evercore ISI set the price target of $48. Canaccord Genuity gave a buy rating and set the price target of $54. JPM Securities initiated with market outperform rating and $55 price target.

Analyst Comments

“Through its flexible cloud-based platform, Qualtrics enables organizations of all sizes to collect, manage and act on experience data encompassing customer, employee, brand and product feedback. Its momentum today with 38% revenue growth CAGR 2018-2020 and consistent >120% NRR, highlights an attractive share gain opportunity in a largely greenfield market, strong competitive differentiation, and size of the current TAM (which we estimate to be >$45 billion),” Morgan Stanley’s Weiss added.

“However, with shares currently trading at 23.5x CY22e sales and 1.11x EV/S/Growth, a slight premium to the recent software IPOs trading at 1.01x, we see the valuation as relatively full.”

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