Last Update 23 Dec 25

Fair value Decreased 2.30%

CWAN: Take-Private Bidding Will Drive Shares Toward Higher Cash Premium

Analysts have trimmed their fair value estimate for Clearwater Analytics Holdings slightly, reducing it from about $28.55 to $27.89 per share. They cited modestly slower projected revenue growth and a lower future price to earnings multiple, partly offset by improved profit margin assumptions and a marginally reduced discount rate.

Analyst Commentary

Analyst reaction to the latest developments has focused on how a potential take private scenario reframes the risk reward profile for Clearwater Analytics Holdings, particularly relative to current trading levels and longer term growth expectations.

Bullish Takeaways

Bullish analysts highlight that a takeover valuation of at least $26 per share implies meaningful upside from the latest trading price, supporting the view that the stock is undervalued on a standalone basis.
The presence of strategic and financial buyers exploring a transaction is seen as external validation of Clearwater Analytics Holdings competitive position, recurring revenue base, and long runway for organic growth.
Upside to fair value is further supported by existing price targets that sit well above the mooted deal floor, suggesting that even after a premium, private owners may still capture additional value through operational execution.
The recent move higher in the share price is interpreted as the market starting to price in both a potential control premium and improved confidence in managements ability to execute on integration and margin expansion.

Bearish Takeaways

Bearish analysts stress that interest from potential buyers may be driven in part by weak public market sentiment and concerns that recent acquisitions could dilute returns, signaling lingering skepticism around capital allocation.
There is caution that expectations of value destruction from certain acquired assets may cap how high bidders are willing to go, limiting upside relative to some of the more optimistic fair value estimates.
Some investors worry that the focus on a take private transaction could distract management from near term execution on product integration and cross selling, adding risk to growth and margin delivery.
Bearish analysts also flag that if a transaction does not materialize, the stock could retrace recent gains as the market refocuses on slower projected revenue growth and the risk of multiple compression.

What's in the News

Warburg Pincus, Permira and Temasek agreed to acquire the remaining stake in Clearwater Analytics for $24.55 per share in cash in an $8.4 billion take-private deal, with closing expected in the first half of 2026, after a go-shop period through late January 2026 (Key Developments).
Thoma Bravo has made an offer to acquire Clearwater Analytics and take the company private, adding another potential bidder alongside existing sponsor discussions (Reuters periodical).
Clearwater Analytics is weighing a potential sale after receiving takeover interest and is working with advisers to solicit interest from additional prospective buyers (Bloomberg periodicals).
Earlier talks had already emerged that Warburg Pincus and Permira were exploring a buyout of Clearwater Analytics, following their role in taking the company public in 2021 (Reuters and Bloomberg, M&A rumors).
Clearwater launched CWAN GenAI, an embedded generative AI platform already deployed across more than $10 trillion in institutional assets, delivering large efficiency gains in reconciliation, reporting and operations for clients (Key Developments).

Valuation Changes

Fair Value Estimate eased slightly from about $28.55 to $27.89 per share, reflecting more conservative assumptions.
Discount Rate edged down marginally from roughly 8.86 percent to 8.83 percent, modestly boosting present value calculations.
Revenue Growth was reduced slightly from about 25.45 percent to 24.95 percent, indicating a small tempering of top line expectations.
Net Profit Margin increased meaningfully from roughly 9.96 percent to 11.96 percent, signaling improved long term profitability assumptions.
Future P/E compressed significantly from about 103.2x to 84.9x, implying a lower valuation multiple applied to projected earnings.

Operational efficiencies from integrations, automation, and AI are expected to enhance margins and profitability over time.
International expansion, product innovation, and strategic partnerships are driving revenue growth and strengthening the company's market position.
Integration and execution challenges from recent acquisitions and evolving industry trends may pressure profitability, revenue stability, and competitive positioning over the long term.

Catalysts

About Clearwater Analytics Holdings

Develops and provides a Software-as-a-Service (SaaS) solution for automated investment data aggregation, reconciliation, accounting, and reporting services to insurers, investment managers, corporations, institutional investors, and government entities in the United States and internationally.What are the underlying business or industry changes driving this perspective?

The company's successful integration of Enfusion and Beacon, combined with rapid realization of $20 million in expense synergies and higher-than-projected gross margins (77.4% versus blended analyst expectations of 76.5%), indicates ongoing operational efficiencies that are expected to further expand margins as generative AI and platform automation are scaled-positively impacting future net margins and EBITDA.
Growing international demand, evidenced by winning major clients like VKB (Germany's largest public insurer) and strong performance across Europe and APAC, points to continued expansion abroad as regulatory complexity and digitization trends force institutional clients to modernize, which supports sustained top-line revenue growth.
Continuous product innovation-especially the integration of generative AI, the launch of proprietary data and risk platforms (e.g., Helios), and the buildout of a unified, front-to-back, multi-asset SaaS solution-positions the company to increase cross-sell/upsell to its existing sticky client base, which should drive up net revenue retention and average revenue per customer.
Partnership agreements (such as with Bloomberg) create optionality for accelerated penetration in large asset manager segments that previously required point solutions, opening new high-value deal pipelines and improving the company's addressable market-directly supporting long-term ARR and revenue growth.
Secular growth in global investable assets and increased adoption of alternative investments are raising demand for scalable SaaS solutions in data management, risk analytics, and integrated reporting; Clearwater's product leadership and focus on alternatives (supported by recent acquisitions and strategic partnerships) position the firm to capitalize as institutions increase spending on cloud-native solutions, positively affecting long-term earnings and market share.

Clearwater Analytics Holdings Earnings and Revenue Growth

Clearwater Analytics Holdings Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Clearwater Analytics Holdings's revenue will grow by 30.4% annually over the next 3 years.
Analysts assume that profit margins will shrink from 73.7% today to 8.7% in 3 years time.
Analysts expect earnings to reach $106.6 million (and earnings per share of $0.36) by about September 2028, down from $406.4 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 136.0x on those 2028 earnings, up from 14.3x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.86%, as per the Simply Wall St company report.

Clearwater Analytics Holdings Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing integration risks with recent acquisitions (Enfusion, Beacon, and Bistro) may lead to operational complexity and diluted focus, potentially resulting in cost overruns or delays, which could pressure net margins and impact the expected synergy-related earnings growth.
Revenue growth guidance references challenging year-over-year comparisons and dependence on sustained acceleration in the second half of the year, indicating potential vulnerability if sequential growth targets are not met, directly impacting future revenue and earnings forecasts.
Heavy reliance on cross-sell and commercial model transformation over a multi-year horizon introduces execution risk, as client receptivity, integration of platforms, and pacing of new offering adoption remain uncertain, which could affect revenue consistency and net retention rates.
Elevated debt levels post-acquisitions ($872 million) and increased ongoing interest and amortization expenses create financial leverage risk, which may restrict investment flexibility and expose the company to earnings volatility or margin compression in the event of market downturns.
Rapid industry shifts toward integrated, end-to-end or open-source platforms, evolving AI/ML capabilities, and client consolidation may outpace Clearwater's innovation or marginalize its differentiated platform, potentially resulting in increased competitive intensity, pricing pressure, and revenue attrition over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $30.545 for Clearwater Analytics Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $36.0, and the most bearish reporting a price target of just $23.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.2 billion, earnings will come to $106.6 million, and it would be trading on a PE ratio of 136.0x, assuming you use a discount rate of 8.9%.
Given the current share price of $20.2, the analyst price target of $30.55 is 33.9% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Operational Efficiencies And Global Demand Will Boost Prospects Amid Risks