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Guidewire Software: Breaking Out To Record Highs

Josh Rudnik profile picture
Josh Rudnik


  • GWRE is breaking out to record highs.
  • Its cloud-based solutions are in demand.
  • I am buying stock in the name.

Guidewire Software (NYSE:GWRE) is breaking out higher on strong fundamental results. Its share price is reaching new record highs after months of consolidation. The company continues to show strong growth as it brings the P&C insurance industry to the cloud. I am buying stock in the name.

Price Action

GWRE is seeing its share price break out higher on strong investor optimism. As demand continues to grow for the company's cloud-based insurance solutions, revenue and its share price are similarly rising. On its monthly chart below, the company's price action is breaking out to record levels after consolidating since late 2017. The strong move higher on fundamental support signals the move could continue to run.

On its shorter-term chart, GWRE's recent breakout above $83.5 was significant as it had acted as strong resistance in recent months. I am, therefore, buying stock in the name, with a stop-loss point at $83. Should the stock decline back to such levels, it will signal a reversal in investor sentiment, and thus, invalidate my investment thesis.

Source: TradingView

Fundamental Narrative

GWRE is taking insurance digital, which is leading to strong growth. In its most recent quarter, total revenues were aided by significant growth in service revenues as its delivery teams were utilized across all of its geographies, according to management. Its growth in services is largely due to the P&C insurance industry's transition to cloud-based solutions. Subscription sales now represent roughly 43% of new sales year-to-date above the high-end of expectations going into the year. The main drivers of subscription and services revenue are its core solutions, InsuranceSuite Cloud and InsuranceNow.

The company provides software products for property and casualty insurers. It offers Guidewire InsuranceNow, a cloud-based platform that offers policy, billing, and claims management functionality to insurers. The company's products include Guidewire InsuranceSuite comprising Guidewire PolicyCenter, an underwriting and

This article was written by

Josh Rudnik profile picture
I am currently a portfolio manager at an RIA in Philadelphia with over $1 billion in assets. The portfolio is dedicated towards macro themed positioning with equities, ETFs, fixed income, as well as options and other alternatives. There are opportunities everywhere, both on the long and short side, and I aim to generate absolute returns on an annualized basis for clients. My absolute return portfolio has returned double-digit percentage returns over the last decade regardless of if the market is selling off, or rallying higher with enthusiasm. Relative returns are nice, but at the end of the day, you can't eat relative returns. When the S&P 500 is down 20%, it doesn't necessarily mean you have to be down too. Join my Marketplace service, Absolute Returns, and see how I am positioning my portfolio in real-time, and what trade ideas are coming about daily. I also offer a live chat as part of the service, where questions and ideas can be discussed.

Analyst’s Disclosure: I am/we are long GWRE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

luckymonkey profile picture
I am also long. Some may prefer to look at FINX. It is the only ETF with substantial exposure to GWRE, currently around 5%. Other holdings >5% in FINX include SQ, PYPL, INTU, and TREE.
JKB2004 profile picture
Thanks for taking the time to write this article on GWRE. It's not a very well known name yet consider it as the VEEV for Insurance. I've had a long position since March last year and am up 40% on it. Not a super sexy business yet a long term secular winner for certain.
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