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.
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.
