Bernstein Pounds the Table on Tableau Software (DATA)

Bernstein analyst Zane Chrane reiterated his Outperform rating and $79 price target on Tableau Software (NYSE: DATA), calling it their highest conviction buy in the mid-cap software space. Chrane sees excellent risk/reward.

Chrane notes decelerating growth, a lack of clarity regarding the company's cloud transition, and increasing competitive fears caused the multiple to contract from ~10x to ~2.5x between July '15 and Feb '16.

He believes revenue deceleration was largely due to temporary growing pains, which have been corrected, and the market underappreciates the strength of Tableau's products and ecosystem.

The analyst said the bull case is strong and downside is limited.

"At 4.4x EV/Sales, we believe multiple compression is unlikely considering leading indicators of growth: ~50% growth in deferred & total ARR, 125% growth in License ARR, >50% recurring revenue (mgmt. has guided to >80% LT), subscription offerings lead to greater adoption & more revenue per customer, & MSFT as only meaningful competitor in a market growing >20%," the analyst commented. "We are not aware of any software company in recent history with such attractive growth characteristics that has sustained a multiple this low long-term."

For an analyst ratings summary and ratings history on Tableau Software click here. For more ratings news on Tableau Software click here.

Shares of Tableau Software closed at $61.97 yesterday.

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