Siteminder Ltd (ASX: SDR) shares have been on form in recent weeks.
Since this time last month, the travel technology company's shares have risen by approximately 16%.
Does this make it too late to invest? Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about Siteminder.
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What is Macquarie saying?
Macquarie has been looking into the industry and received feedback relating to its channel management. The good news is that the feedback was positive. It said:
Core channel-management segment should compound mid-teen growth. We expect SDR's subscription revenue (64% of group) to grow at a 15% CAGR over FY24-27E, supported by property growth, which should benefit from structural industry tailwinds and SDR's market-leading position. Feedback suggests SDR's channel manager is best-in-class, with few direct competitors of scale in the SME space.
The broker also spoke positively about Channels Plus (CP) and Dynamic Revenue Plus (DRP). It adds:
We have high conviction in CP adoption. Given CP is opt-out from FY26 we are confident front-book adoption will be high. After our meetings we also believe back-book adoption will be strong, albeit it will take time. CP is a unique product that provides a significant value proposition to both hotels and OTAs.
DRP not an immediate catalyst. Feedback suggests DRP adoption by SMEs is likely, but by mid-/larger sized hotels could be tougher, given incumbents. SDR is trading on 5.1x NTM EV/sales and could re-rate to 6x as it builds a track record of hitting targets (FCF break-even; rule of 40) and consensus expectations. If successful, we believe DRP could drive a LT re-rating to c.8x
Should you buy Siteminder shares?
According to the note, the broker has retained its outperform rating and $6.09 price target on Siteminder's shares.
Based on its current share price of $5.37, this implies potential upside of 13.5% for investors over the next 12 months.
Commenting on its outperform rating, the broker concludes:
Outperform. We think SDR will rapidly grow medium-term revenue on continued market share growth and transaction product adoption. Smart Platform represents material upside revenue potential and, if successfully executed, should support a long-term re-rating.
Catalysts: 1) FY25 results; 2) reaching positive UFCF; 3) Smart Platform revenue coming online; and 4) achieving ~30% revenue growth. Valuation: No change to our DCF-based TP of $6.09; comparable to a NTM fwd EV/sales value of $6.11 using the high end of a 4-6x range given peer multiples and expected revenue growth.
