Breaking News: Smartsheet Inc. (NYSE:) Downgraded to Neutral by JPMorgan After Acquisition Announcement
In a recent development, JPMorgan has downgraded Smartsheet Inc. (NYSE:) to Neutral from Overweight and adjusted its price target to $56.50 from $60.00 following the announcement of its acquisition by private equity firms Blackstone (NYSE:) and Vista Equity Partners. The acquisition, valued at approximately $8.4 billion, or $56.50 per share, is expected to be completed in Smartsheet's fiscal fourth quarter in January 2025.
The valuation multiples cited by JPMorgan indicate an enterprise value (EV) to forward twelve months (FTM) revenue multiple of 6.4 times, around 6 times the calendar year 2025 (CY25) revenue. The EV to FTM unlevered free cash flow (uFCF) multiple stands at approximately 28 times, or 25 times the CY25 uFCF.
The new price target of $56.50 set by JPMorgan aligns with the per-share price offered by Blackstone and Vista Equity Partners, reflecting the terms of the acquisition and Smartsheet's expected financial trajectory leading up to the deal's closure.
In other news, Smartsheet has reported a 17% increase in revenue for the second quarter of fiscal year 2025, amounting to $276.4 million, with annualized recurring revenue also seeing a 17% rise to $1.093 billion. Despite a negative P/E ratio, the company boasts a remarkable gross profit margin of 81.61% as of the last twelve months leading up to Q1 2023.
KeyBanc Capital Markets maintains a Sector Weight rating on the company, noting the potential for Smartsheet to command a higher value in a private equity transaction.
In conclusion, this acquisition news highlights a significant development for Smartsheet Inc., with potential implications for its financial health and market position. Investors should consider the insights and analysis provided to make informed decisions about their investments and the future prospects of Smartsheet Inc.