DataWalk: sales growth deceleration priced in already (stays BUY)
We have updated our forecasts and valuation for DataWalk (DAT), and we reiterate our BUY rating on the stock, with our 12M price target (PT) cut to PLN 135.1/share, implying 61% upside potential. The stock price has dropped 54% in the LTM, following major deceleration in DataWalk’s sales growth: in 1-3Q22, the company recorded a top-line increase of 29% vs. 96% in 2021. The company notes both internal (insufficient implementation and pre-sales capacity) and external factors (a drop in demand due to the macro uncertainty) as causing the slowdown. As a result of the difficulties, DataWalk has reduced its mid-term sales growth outlook to 50% annually, vs. 70% previously. We have reduced our 2023-24E sales forecasts by 46-54%, to PLN 52.2-73.6m, resulting in the cut in our PT. We assume a c.40% 2022-25E sales CAGR, a little below the company’s guidance, in order to stress test our BUY case under a conservative scenario. We remain BUYers, as we appreciate the uniqueness of the platform and believe in DataWalk becoming a market disruptor, which should be noticed by a strategic investor, at some point. We continue to perceive DataWalk as an option-like investment, with potentially high returns for shareholders in the long term, following the sale of the platform, assumed in DAT’s strategy. On our estimates, DataWalk trades at 2023-24E EV/sales of 7.7-5.9x, at 20-22% discounts vs. its peers.Datawalk SA Formerly known as Pilab SA. Datawalk SA, formerly known as Pilab SA, is a Poland-based a software publisher. The Company specializes in the area of data analysis, offering Business Intelligence solutions. It operates DataWalk, an agile analysis platform, which enables financial and insurance institutions to discover fraud attempts, combat money laundering, as well as analyze and monitor business processes, such as sales, claim adjustment and debt collection, among other applications. The Company operates through Datawalk Inc, its wholly-owned subsidiary based in the United States.
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