SolarWinds initiated with a Sector Perform at Scotiabank on balanced risk/reward

As previously reported, Scotiabank analyst Patrick Colville initiated coverage of SolarWinds with a Sector Perform rating and $13 price target. After SolarWinds’ winter of discontent in 2020, the firm thinks the company’s transformation has “made glorious its prospects” from its “now rock-solid network performance management install base,” maintenance-to-subscription boost, and shareholder-friendly capital return, the analyst tells investors. However, the firm believes consensus top-line targets in 2025 fully factor in these tailwinds and that the investments SolarWinds needs to make in go-to-market and product development mitigate further margin expansion, leaving upside and downside “balanced” at these levels, the analyst added.