Shares of Qualtrics International (XM) - Get Qualtrics International Inc. Report fell Tuesday after the customer-survey software company, which went public Jan. 28, received mixed commentary from analysts.
Qualtrics, formerly part of SAP (SAP) - Get SAP SE ADS Report, garnered seven new hold ratings and five buys Tuesday, according to Bloomberg. Analysts expressed concern about the company’s valuation. It trades at 31.92 times sales, according to Morningstar.
The stock recently traded at $41.45, down 9%, the same amount by which it has slid since going public
Piper Sandler analyst Brent Bracelin rated Qualtrics as neutral with a $49 share-price target. Its first-mover advantage merits a premium valuation, but he noted that its Monday close of $45.60 wasn’t far from his target.
“The XM prospects over the next three to five years are certainly bright,” with revenue possibly hitting $4 billion within five years, Bracelin said. But those prospects are already reflected in the company’s valuation, he said. In light of SAP’s big stake in the company, there’s not much room for the multiple to expand.
Raymond James analyst Brian Peterson was more bullish, offering an outperform rating and a share-price target of $55.
XM will benefit from a sustained rise in adoption, as its industry’s customers boost their spending, he wrote. XM also enjoys a unique position in the market and is its biggest and fastest growing member, Peterson said.
Last month, Qualtrics estimated its fourth-quarter revenue would total $211.5 million to $214.5 million. It predicted an operating loss of $10 million to $13.5 million, and a negative operating margin of 5% to 6%.