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Guidewire Software Inc GWRE

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Morningstar’s Analysis

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Economic Moat




Guidewire Settles Into Cadence of Strong Beats and Weaker Outlooks; FVE Stable at $112

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

For the sixth consecutive quarter, wide-moat Guidewire reported material upside, which was offset again by a weaker-than-expected outlook for the next quarter. The outlook for the full year was also light. Given the emerging pattern of significant quarterly outperformance following guide downs, as well as a relatively new leadership team, we are not necessarily surprised by guidance. We see management hitting their stride, with 10 InsuranceSuite deals closed even in the face of COVID-19-driven macro uncertainty, and no real negative execution surprises. Ten deals would have been a great year two years ago. We continue to believe that a transition to a true SaaS model is ultimately better for Guidewire and investors, as results should no longer be whipsawed because of a single large deal. Further, we continue to expect the company should be the primary winner, as the property and casualty insurance industry continues to modernize over the next decade. Based on results and subsequent model fine-tuning, we are maintaining our fair value estimate at $112 per share, and see shares as modestly overvalued.

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Company Profile

Business Description

Guidewire Software provides software solutions for property and casualty insurers. Flagship product InsuranceSuite is an on-premises system of record and comprises ClaimCenter, a claims management system; PolicyCenter, a policy management system including policy definitions, quotas, issuance, maintenance, and renewal; and BillingCenter, for billing management, payment plans, and agent commissions. The company also offers InsuranceNow, a cloud-based offering, as well as a variety of other add-on applications.

2850 S. Delaware Street, Suite 400
Foster City, CA, 94404
T +1 650 357-9100
Sector Technology
Industry Software - Application
Most Recent Earnings Apr 30, 2020
Fiscal Year End Jul 31, 2020
Stock Type Aggressive Growth
Employees 2,355