SolarWinds Corp (NYSE:SWI) will put its Q3 report out today after the close, which represents its first earnings report since going public on October 19. So, investors may also be positioning themselves in anticipation of a solid, upside report from the company tonight.
On that note, SWI’s gross margin has been steadily improving, while it has doing a very good job managing costs. Along with the 17% top-line growth for the six months ended June 30, 2018, SWI’s operating income surged by 217% to $44.1 mln. Although its top-line growth isn’t spectacular, the company is well-run, and, already had a run in the public markets before being taken private in 2016. Therefore, it should be in good shape for managing outlook expectations.
SolarWinds Corp (NYSE:SWI) is unquestionably the most poorly named company on the planet. No, it isn’t a solar power company. It provides information technology (IT) infrastructure management software products in the United States and internationally.
It offers products that are designed to solve the day-to-day problems encountered by technology professionals managing complex IT infrastructure covering on-premise, cloud, and hybrid IT environments. The company markets and sells its products directly to database administrators, storage administrators, Web operators, and DevOps professionals, as well as managed service providers.
The company was formerly known as SolarWinds Parent, Inc. and changed its name to SolarWinds Corporation in May 2018. SolarWinds Corporation was founded in 1999 and is headquartered in Austin, Texas.
Ready for Anything
Given the size and prominence of SWI, there are quite a few analysts picking up coverage on the name. As we alluded to above, a majority of them landed on the bullish side. The headliner that is likely catching the most attention is Goldman Sachs’ Buy rating and $23 price target, representing an upside of 56% from yesterday’s close. For a tier-one firm such as Goldman Sachs to take such an aggressive bullish stance on a stock is especially compelling, particularly as it is coming just ahead of earnings.
A few other notable bullish initiations include JP Morgan’s Overweight and $20 price target, and Credit Suisse, RBC Capital, and Evercore ISI each assigning Outperforms on the stock, with price targets of $19, $18, and $18, respectively.
On the more cautious side, Barclays went with an Equal Weight and $16 price target. Morgan Stanley also put an Equal Weight on the stock, but, it has a price target of $18, which still pencils out to 22% upside from current prices.
It has been a rocky start for SWI, with the volatile broader markets not helping its cause. HOwever, with a pair of potential catalysts lined up today in its quiet period expiration and earnings report, the stock may be poised to make a run to new post-IPO highs should its Q3 results and guidance come in better than expected tonight.
SolarWinds Corp (NYSE:SWI) generated sales of $131.6M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 10.5% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($193.5M against $303.2M, respectively).