Investment and accounting software provider Clearwater Analytics (CWAN) is considering a possible sale after receiving takeover interest from potential buyers, Bloomberg reported. CWAN stock has plunged 33% year-to-date due to concerns about integration risks stemming from the company’s acquisitions, mainly the $1.5 billion Enfusion deal. CWAN stock was up 10.6% in Wednesday’s pre-market trading in reaction to the news.
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Clearwater Analytics Evaluates Possible Sale
Clearwater Analytics has reportedly engaged advisers to evaluate its strategic options and assess interest from prospective buyers. Discussions are still in the early stages, and it remains uncertain whether they will lead to a final deal.
Earlier this year, Clearwater acquired Enfusion, Inc., a software-as-a-service (SaaS) solutions provider for the investment management and hedge fund sectors, in a transaction valued at $1.5 billion. The company stated that it expects the acquisition to boost its asset management business, given Enfusion’s expertise in the hedge fund space. The Enfusion deal also expanded Clearwater’s international footprint. However, concerns about integration risks have weighed on investor sentiment.
Meanwhile, Clearwater is enhancing its business by leveraging artificial intelligence. Earlier this month, the company announced that its CWAN GenAI platform supports more than 800 AI agents developed by CWAN clients and internal teams, in addition to 20 domain-specific agents.
Is CWAN a Good Stock to Buy?
Recently, Clearwater Analytics reported better-than-expected revenue for the third quarter, while earnings per share (EPS) met the Street’s expectations. Following the Q3 print, JPMorgan analyst Alexei Gogolev reduced his price target for Clearwater Analytics stock to $26 from $28 and reiterated a Buy rating. The 4-star analyst stated that while Q3 results reflect an encouraging pipeline, benefits from acquisitions are taking longer to “materialize.”
Currently, Clearwater Analytics scores Wall Street’s Strong Buy consensus rating based on 10 unanimous Buys. The average CWAN stock price target of $29.56 indicates about 61% upside potential.
