Analyst Note| Dan Romanoff, CPA |
Our $126 per share fair value estimate for wide-moat Guidewire is unchanged after its virtual analyst day that contained no surprises but probably lifted investor confidence that the worst is over. While it has been rocky for investors over the last two years, we agree with management that the transition is now moving along relatively smoothly. Management’s prepared remarks centered around progress on the company’s transition to the cloud, which it characterized as slightly ahead of schedule compared to the vision laid out at last year’s analyst day. Guidewire also provided modest adjustments to its medium-term operating model. While there were some interesting details, we did not come away with any big change in our thinking that Guidewire is the leader in core software systems for the property and casualty insurance market and that the transition to the cloud is better for the company, its customers, and investors alike.