The cloud-based customer feedback management software provider Medallia (MDLA) provides a platform for customer feedback, whether it is given through speech, text, video, messaging, or online. Medallia’s software analyzes feedback from large review sites such as TripAdvisor and social sites such as Twitter, as well as from surveys and contact centers.
Recently, Medallia agreed to be acquired by Thoma Bravo, a software investment firm, in an all-cash deal valued at $6.4 billion. The acquisition, which awaits Medallia shareholders’ and other approvals, is likely to close in 2021.
Regarding the acquisition, Medallia CEO Leslie Stretch said, “We are eager to build on our success and begin the next phase of differentiated growth, and we believe that becoming a private company represents the best opportunity to do just that. In addition to maximizing value for our shareholders, this transaction will enable us to execute on our long-term strategy with even greater effectiveness, efficiency and flexibility.”
Following the deal, Needham analyst Scott Berg downgraded the rating from Buy to Hold. The analyst said, “The deal represents EV/Sales multiple of 11.2x and 9.4x based on FY22/23 estimates, respectively, which we view a touch light with our expectation of a reopening re-acceleration.”
According to Berg, the pandemic outbreak negatively impacted Medallia’s growth, as the company has relatively high exposure to retail and hospitality (at around 35% of annual recurring revenue).
Therefore, he believes that the acquisition seems to be strategically and financially sound for shareholders as post-pandemic, greater challenges will lie ahead in “reaccelerating subscription billings growth.” (See Medallia stock charts on TipRanks)
The Street’s consensus rating on the stock is a Moderate Buy. That’s based on 5 Buys and 5 Holds. Looking ahead, the average Medallia price target stands at $41.50, putting the upside potential at about 23.5% over the next 12 months.
According to the new TipRanks’ Risk Factors tool for the company, the Medallia stock is at risk mainly from three factors: Finance and Corporate, Tech & Innovation, and Ability to Sell, which contribute 39%, 17%, and 17%, respectively, to the total risk for the stock. Within the Finance and Corporate risk category, MDLA has 29 risks, details of which can be found on the TipRanks website.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your analysis before making any investment.
