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In a note to clients Friday, a Piper Sandler analyst was positive on shares of Sprout Social (NASDAQ:SPT), reiterating an Overweight rating and $70 per share price target.
The analyst said that after analyzing Twitter (NYSE:TWTR) metadata, they put together a proprietary analysis of Sprout Social’s momentum within the Fortune 500.
“Our analysis yielded the following insights: 1) we estimate Fortune 500 market share for SPT has doubled in the last two years to >17%, 2) high-end traction remains strong in 2022 with several key wins: Qualcomm (NASDAQ:QCOM), General Dynamics (NYSE:GD), Carvana (NYSE:CVNA), Danaher Corp (NYSE:DHR), XPO Logistics (NYSE:XPO), conversion of Salesforce (NYSE:CRM) over to Sprout Social this month, and 3) opportunity for continued market share gains seems favorable with >1/3rd of the Fortune 500 using non-competitive solutions (outside the top four tools),” explained the analyst.
While the firm’s primary concern “with the setup on SPT is lapping four consecutive quarters of >40% y/y revenue growth with net new ARR growing only a modest ~3% YTD,” they are optimistic the next two quarters will demonstrate improving net new ARR trends, adding that with “increasing enterprise focus, comes increasing 2H seasonality.”
