As noted, Tibco is still in the midst of restructuring its business. So I'm not suggesting the company is completely out the woods yet. In that regard, bears are correct to point out that the company is still experiencing some margin weakness. That gross margin narrowed to 71.2% from 71.7%, while total operating expenses jumped 12%, is a perfect example of the work there is left to do at Tibco.
I've been bullish on this stock
for several quarters, to say Tibco's growth improvements weren't surprising wouldn't be true. Granted profits are still unspectacular. But there's no denying that management's recent investments in the cloud and data analytics have begun to pay off.
To the extent that Tibco can build its capabilities in specialized areas like integration, while shoring up its core infrastructure business, this stock still has plenty of room to run. For now, though, investors have to credit the management team for having navigated this weak patch and getting this company back on track.
With long-term revenue growth that should outperform both IBM and Oracle, I'm upping my target on this stock to $32 per share, which represents a 30% premium from current levels. How's that for a strong statement?
At the time of publication, the author held no position in any of the stocks mentioned
This article was written by an independent contributor, separate from TheStreet's regular news coverage.