Clearwater Analytics Holdings (CWAN): Assessing Valuation After AI-Powered Product Updates and New Institutional Client Wins

If you have been following Clearwater Analytics Holdings (NYSE:CWAN), the company’s recent Connect '25 conference may have caught your eye. At this event, Clearwater announced new AI-powered enhancements to its Alternative Assets Solution, aiming to solve some of the biggest operational pain points in the fast-growing private credit market. The updates promise to automate complex loan structures, bolster compliance, and speed up fund research. All of these developments are highly relevant as institutional investors increase their allocations to alternative assets.

These announcements come soon after Clearwater secured Agile Investment Management as a client for its unified risk and performance solution, underscoring its expanding footprint among institutional asset managers. Still, despite these product wins and a large, addressable market, Clearwater’s stock has not mirrored this momentum. Over the past year, shares have dropped 28 percent, with a steady slide throughout the year, even as private credit allocations across the industry continue to climb. Short-term performance has also lagged, suggesting that the market may still be weighing the company’s long-term outlook against near-term growth metrics.

With this mix of innovation and subdued stock price movement, the question for investors is clear: is Clearwater Analytics Holdings a bargain at current levels, or is the market already taking into account its future growth potential?

Most Popular Narrative: 40.3% Undervalued

The prevailing narrative suggests Clearwater Analytics Holdings is significantly undervalued by over 40 percent compared to its estimated fair value, based on a combination of ambitious growth projections and operational strategies.

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. These efficiencies are expected to further expand margins as generative AI and platform automation are scaled, positively impacting future net margins and EBITDA.

Want to know the real story behind this bold valuation? The hidden driver could be rapid expansion or a surprising margin twist no one expected. Rumors swirl around what makes the forecast so aggressive. Curious to unearth what makes the analysts so bullish on Clearwater’s financial future? Find out what assumptions are quietly inflating that price target above the current market.

Result: Fair Value of $30.55 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the story could easily change if integration hurdles or weak client uptake for new offerings limit Clearwater's expected future growth.

Find out about the key risks to this Clearwater Analytics Holdings narrative.

Another View: SWS DCF Model

Looking at Clearwater Analytics Holdings through the lens of our SWS DCF model, the stock is again assessed as undervalued. This echoes the earlier conclusion but uses a different methodology. Still, questions remain about whether the future will deliver as expected.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Clearwater Analytics Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Clearwater Analytics Holdings Narrative

If you see things differently or want to take your own approach, you can build a custom narrative for Clearwater Analytics Holdings in just a few minutes. Do it your way

A great starting point for your Clearwater Analytics Holdings research is our analysis highlighting 5 key rewards and 4 important warning signs that could impact your investment decision.

Ready to Find Your Next Big Opportunity?

The market moves fast and bold investors seize fresh ideas early. Don’t let great opportunities slip past. Expand your research with these hand-picked ways to spot the market’s hidden gems and future winners:

• Spot companies shaking up digital finance and payments as you access cryptocurrency and blockchain stocks leading the charge into blockchain innovation and crypto adoption.
• Capture high-yield potential by checking out dividend stocks with yields > 3% focused on stocks offering robust income streams and attractive dividend yields above 3%.
• Uncover the next tech disruptors with AI penny stocks where artificial intelligence is redefining growth across every industry.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com