Deutsche Bank has some interesting comments on Ariba (ARBA) following better than expected results posted last night.
Ariba reported strong 2Q revenues and EPS of $83m and $0.09 (above DB's and consensus estimates of $82m and $0.08) with subscriptions of $31m (up over 50% y/y organically) and bookings up over 70% organically. Firm believes 2Q could represent a turning point for the stock and see meaningful appreciation in the next six months on execution to guidance alone. Reiterates Buy and $16 price target.
Firm sees execution to management's reiterated guidance of $0.45 in EPS for Sept. improving investor sentiment in the short-term and sees several dynamics helping longer-term growth:
- Full-featured SaaS release GA
- Sales capacity up 26% y/y and productivity is improving
- An improved competitive environment with SAP's delayed SRM initiative and its recently completed Procuri, Inc. acquisition
Firm expects these factors alongside a growing ASN opportunity being showcased at the May 5th Analyst day and User Conference and would recommend building positions before that event.
Notablecalls: I see ARBA just broke the $10 level this AM. More upside may be in the cards.