Concur Tech Should Rise on Momentum for Travel SaaS

Deutsche Bank is out with a very interesting call on Concur Tech (NASDAQ:CNQR) saying the company is on the verge of something big. They are raising estimates (2008/2009) and price target following the closure of Gelco and highlight Concur as an attractive holding as it has the strongest market power in our coverage (5-10x the next closest competitor) and will increasingly garner the benefits of scale inherent in SaaS. Firm believes organic subscription growth (recently accelerating from the low 30s in '06 to the mid-to-high 30s) will be fueled by continued customer expansion (400+ adds per quarter) and Travel 2.0. They reiterate Buy and raise target to $40 (from $30).

This quarter Concur is set to release Travel 2.0, an end-to-end integrated travel booking to expense management offering that the firm believes will represent a transformational impact on the market over time. DB sees Concur's SaaS approach as best positioned/value proposition to the corporate consumer and believe it could be potentially disruptive to the travel bookings market. Concur has seen initial success in Travel booking (i.e., over 51% of Travel 100) and has wins at key "lighthouse" accounts (e.g., ADP, HP, and Dupont).

Notablecalls: Is CNQR cheap? No way. Does it have momentum? Hell yes! Software-as-a-service (SaaS) in travel looks to be white hot here. We had two firms initiate the stock with positive ratings last week and I'm sure there's more to come in the near term. Ride that momentum.

While I usually refrain from offering targets on my calls, I'm going to make an exception on this one. The thing has $36 written all over it. Actionable trading call alert!

Comments

[travel 2.0 beta]

Enter your comment hereI think you've overvalued CNQR. Here's why

1. CNQR will face significant challenges around adoption of Travel 2.0 . Their migration strategy for customers is weak and adoption will be a key challenge for them. Watch this unfold in 2008.

2. Competition is heating up with entry of new players in to the expense market which by the way has low barriers to entry.

3. They have no platform and worst still every technology under the sun which will increase their cost of operations.