Embracing the news of a potential takeover and reveling in a robust Q2 performance, Smartsheet (SMAR) stock catapulted to a pinnacle, hitting a new 52-week high of $51.42. This upward trajectory continued into after-market trading, sparking fervor among investors. Reports by Reuters unveiled discussions between private equity powerhouses Vista Equity Partners and Blackstone (BX) regarding the acquisition of enterprise software firm Smartsheet.
Adding fuel to the blaze of excitement was Smartsheet’s Q2 triumph, with adjusted earnings per share (EPS) skyrocketing by 175% year-over-year, reaching a commendable $0.44, surpassing the consensus of $0.29. Similarly, revenue climbed by 17.3% year-over-year to $276.41 million, outshining the anticipated $274.23 million. The robust revenue growth was buttressed by a significant 17% surge in annualized recurring revenue compared to the previous year.
The Acquisition Dance: Insights into Smartsheet’s Potential Buyout
A prospective acquisition of Smartsheet is on the horizon, with a consortium led by Vista Equity Partners and Blackstone eyeing the workplace collaboration software provider. Vista Equity Partners currently holds a 4.7% stake in Smartsheet. Following the recent surge, Smartsheet now boasts a market capitalization of $6.8 billion. If discussions proceed smoothly, a finalized deal might materialize in the weeks ahead.
Notably, in July, Reuters shed light on Smartsheet’s strategic move of engaging Qatalyst Partners to evaluate acquisition bids from private equity giants. Armed with a suite of features, Smartsheet competes head-to-head with Microsoft (MSFT) Excel. Additionally, Smartsheet counts prominent clients like Pfizer (PFE), Cisco (CSCO), and American Airlines (AAL) among its ranks. It serves a formidable 85% of the Fortune 500 companies slated for 2023.
Strategic Outlook: Smartsheet Maps a Promising Q3 and Full-Year Projection
Looking ahead to Q3 FY25, Smartsheet envisions revenue growth spanning 15% to 16%, with figures ranging from $282 million to $285 million. The adjusted EPS forecast falls in the range of $0.29 to $0.31. Market analysts are currently anticipating an adjusted EPS of $0.29 against revenues of $287 million for Q3.
For the fiscal year 2025, Smartsheet envisages a revenue upsurge of 16% to 17%, reflecting total revenues of $1.116 billion to $1.121 billion. The adjusted EPS is forecasted between $1.36 and $1.39. In comparison, analysts are expecting an adjusted EPS of $1.25 on revenues totaling $1.12 billion.
Investor Perspectives: Evaluating Smartsheet’s Stock Potential
On Wall Street, analysts’ sentiments around the trajectory of Smartsheet stock are currently divided. Nevertheless, the recent stellar Q2 performance and the buzz surrounding a potential takeover could sway their stances.
As per the latest data from TipRanks, SMAR stock boasts a Moderate Buy consensus rating, founded on 12 Buy recommendations, two Holds, and a solitary Sell opinion. The average price target for Smartsheet stands at $50.92, hinting at a modest 3.2% upside from current levels. Notably, SMAR shares have ascended by 3.2% year-to-date.