Smartsheet (SMAR) stock jumped to a new 52-week high of $51.42 yesterday on the news of a potential takeover and continued the surge in after-market trading on a healthy Q2 beat. According to Reuters, private equity firms Vista Equity Partners and Blackstone (BX) are in talks to acquire enterprise software company Smartsheet.
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The buyout news was followed by better-than-expected Q2 results. Smartsheet’s adjusted earnings per share (EPS) soared 175% year-over-year to $0.44 and beat the consensus of $0.29. Similarly, revenue of $276.41 million rose 17.3% year-over-year and exceeded the consensus of $274.23 million. Smartsheet’s solid revenues were supported by annualized recurring revenue growth of 17% compared to the prior year.
Details of Potential Buyout of Smartsheet
A consortium led by Vista and Blackstone is considering acquiring the workplace collaboration software provider. Vista already has a 4.7% stake in Smartsheet. Following yesterday’s surge, SMRA has a market capitalization of $6.8 billion. A deal could be signed in the coming weeks, assuming that talks do not fall apart.
In July, Reuters reported that Smartsheet was seeking advice from Qatalyst Partners to review acquisition offers from private equity firms. With its extensive features, the company competes with Microsoft (MSFT) Excel. Moreover, Smartsheet has some large noteworthy clients such as Pfizer (PFE), Cisco (CSCO), and American Airlines (AAL). It serves roughly 85% of the 2023 Fortune 500 companies.
Smartsheet Issues Robust Q3 and Full-Year Outlook
For Q3 FY25, Smartsheet guided for revenue growth of 15% to 16%, amounting to $282 million to $285 million. Also, adjusted EPS is projected between $0.29 and $0.31. For reference, analysts are projecting Q3 adjusted EPS of $0.29 on revenues of $287 million.
For Fiscal 2025, Smartsheet forecasts revenue growth of 16% to 17%, resulting in total revenues of $1.116 billion to $1.121 billion. Adjusted EPS is guided between $1.36 and $1.39. Meanwhile, analysts are projecting adjusted EPS of $1.25 on revenues of $1.12 billion.
Is Smartsheet a Good Stock to Buy?
Wall Street analysts currently have divided views on Smartsheet stock’s trajectory. However, their ratings could change following the solid Q2 beat and news of a potential takeover.
On TipRanks, SMAR stock has a Moderate Buy consensus rating based on 12 Buys, two Holds, and one Sell recommendation. The average Smartsheet price target of $50.92 implies 3.2% upside potential from current levels. SMAR shares have gained 3.2% so far this year.
