On Monday, Scotiabank initiated coverage on OneStream Inc. (NASDAQ:OS) with a Sector Outperform rating and a price target of $34.00. The financial institution's analysis highlighted OneStream's role in transforming the Office of the CFO with its platform that unifies enterprise systems to combat data silos, providing a single source of truth for finance leaders.
The analyst from Scotiabank pointed out that while the Office of the CFO has been traditionally slow to evolve, the demands on finance departments have increased, necessitating tools for data-driven decision-making, agility, and accuracy. OneStream's platform has been recognized for its modern, extensible capabilities, which are making significant inroads in capturing a large Total Addressable Market (TAM) valued at $50 billion.
OneStream's growth profile was noted to be more durable compared to other software companies, with Annual Recurring Revenue (ARR) growing by 37% in FY23. This assessment is supported by research involving 22 customers and one partner, which provided high conviction in OneStream's ability to maintain its status as a durable growth company in the software sector over the medium term.
Despite a valuation that is considered elevated, Scotiabank views OneStream as a "sleep well at night" story. Confidence is further bolstered by the extensive experience of OneStream's leadership in the market, which is expected to continue driving share gains. The Sector Outperform rating and the $34 price target are based on approximately 14 times the projected Enterprise Value to Calendar Year 2025 Sales (EV/CY25E Sales).
In other recent news, OneStream Inc. has been the focus of multiple financial firms initiating coverage. Needham, BofA Securities, TD Cowen, Truist Securities, and Piper Sandler all assigned a Buy rating to OneStream, with price targets ranging from $32 to $37. Each firm recognized OneStream's potential for sustained high revenue growth rates, with BofA Securities projecting a 27% revenue increase in 2024 and Needham highlighting the company's robust financial model.
OneStream's approach to integrating machine learning and artificial intelligence technologies into its platform garnered attention, with TD Cowen noting its potential for significant free cash flow margin expansion. Truist Securities also emphasized OneStream's positive free cash flow, suggesting profitability in the near term.
Furthermore, Piper Sandler highlighted OneStream's impressive annual recurring revenue, expecting it to quadruple to over $2 billion in the coming years. These recent developments reflect a positive outlook for OneStream, with various firms expressing confidence in the company's growth trajectory and market position.
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