Guidewire (GWRE) Valuation Check After Heritage Cloud Win and New AI-Powered Olos Platform Launch

Guidewire Software (GWRE) just checked two important boxes for investors by landing Heritage Insurance as a full InsuranceSuite cloud customer across 13 states and rolling out its Olos platform upgrade with new AI driven underwriting and pricing tools.

See our latest analysis for Guidewire Software.

The latest client win and Olos rollout come after a choppy stretch, with a 90 day share price return of negative 19.33 percent, but the 3 year total shareholder return of 226.54 percent shows longer term momentum is still firmly intact.

If this kind of insurance tech story has your attention, it is worth exploring other high growth tech and AI names through high growth tech and AI stocks while conditions remain active.

With shares down nearly 20 percent in three months, but still trading at a premium to many software peers and well below analyst targets, is Guidewire a rare high quality compounder on sale, or is the market already baking in years of cloud and AI growth?

Most Popular Narrative Narrative: 26.4% Undervalued

Guidewire’s most followed narrative sees fair value well above the last close of $197.46, framing the recent pullback as a potential opportunity.

The analysts have a consensus price target of $249.786 for Guidewire Software 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 $290.0, and the most bearish reporting a price target of just $155.0.

Read the complete narrative.

Want to see why strong revenue compounding, rising margins, and a punchy future profit multiple still add up to upside in this narrative? The bold growth assumptions, profitability ramp, and valuation bridge behind that target are anything but ordinary. Curious how those moving parts combine into a double digit return path from here? Read on to unpack the full story behind the numbers.

Result: Fair Value of $268.38 (UNDERVALUED)

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

However, this upside case still hinges on a smooth cloud migration and stable macro conditions, with FX swings and execution missteps capable of derailing expectations.

Find out about the key risks to this Guidewire Software narrative.

Another Angle on Valuation

Those bullish targets sit awkwardly beside today’s price to sales of 13.2 times. This is almost triple the US software industry at 4.9 times, well above peers at 6.9 times, and more than double a fair ratio of 6.3 times. That raises the question of how much execution risk is already priced in.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Guidewire Software Narrative

If you see the story differently or want to stress test the assumptions with your own work, build a personalized narrative in just minutes, Do it your way.

A great starting point for your Guidewire Software research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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