OneStream receives bullish ratings in Wall Street coverage initiations

Investing.com -- Wall Street analysts have initiated coverage on OneStream Inc (NASDAQ:OS ) with an overall bullish stance, citing the company's strong market position, rapid growth, and innovative platform designed for the Office of the CFO. 

Analysts from BofA Securities, Citi Research, and BTIG have all flagged OneStream's ability to capture a significant share of the market, supported by its differentiated offerings and strategic use of AI.

BofA Securities has initiated coverage with a "buy" rating and a price objective of $35, suggesting a 22% upside from the current level. 

“We think OneStream has a disruptive and differentiated offering – allowing it to steadily increase its share of its lucrative and lightly penetrated (~1%) $44bn market for business performance management software,” analysts at BofA said in a note. 

The company’s strategy to replace traditional tools like Excel and outdated legacy systems has driven impressive growth, with revenue increasing by 34% year-over-year in 2023. BofA expects this robust growth trajectory to continue into 2024, projecting a 27% increase.

Similarly, Citi Research has taken a "neutral/high risk" stance with a target price of $34. Citi acknowledges OneStream’s leadership in financial consolidation and its potential to benefit from the migration of legacy systems like Oracle (NYSE:ORCL ) and SAP to the cloud. 

“While we see a lot to like, a 45% return since IPO and a 92nd percentile EV/rev multiple create a more balanced risk/reward despite conservative estimates,” analysts at Citi said.

The brokerage appreciates OneStream’s strong net revenue retention rate, which has recently climbed to 118%, and its ability to leverage AI to enhance its platform’s capabilities.

BTIG, on the other hand, shares a more optimistic view with a "buy" rating and a price objective of $35. 

“In the current macro environment where efficiency is key, OneStream provides the most visibility, functionality, and extensibility of any platform in the financial analysis, planning, and performance management in the market today,” said analysts at BTIG. 

The brokerage emphasizes that the platform's ability to replace legacy systems and its growing adoption among over 1,400 customers are indicative of its market potential. With the business performance management market still lightly penetrated, BTIG sees significant room for OneStream to expand its footprint.

A key theme across is OneStream’s strategic use of AI to enhance its offerings. BofA Securities and Citi Research both mention the company's AI initiatives, particularly the Sensible AI and Sensible ML tools, which automate routine tasks and accelerate application development. 

These advancements are expected to further entrench OneStream’s platform within organizations and drive future growth.

The analysts also address valuation concerns. BofA Securities justifies its premium price objective based on a 14.5x enterprise value to CY25 revenue multiple, reflecting the company's strong growth potential. 

Citi Research, while acknowledging OneStream’s strengths, remains cautious due to the stock’s high valuation. BTIG supports a premium valuation given the company's growth prospects and market positioning.

A majority of analysts who have initiated coverage on the stock are bullish, with 14 of them giving the stock bullish ratings.

Source: Investing.com