This trend has not been lost on investors, as evidenced by the stock's meteoric rise. Even with the surge higher, some analysts believe there is more to come. Today, the quiet period expired for PS, allowing investment banks involved with the IPO to publish research and analysis for the first time. Despite the rich valuation (11x FY19 revenue) and a couple cautious notes, a majority of analysts are still feeling bullish on the stock.
PS is an enterprise software company committed to closing the global technology skills gap. This gap exists because technology is changing faster than the world’s ability to acquire and adapt to new skills. To address this challenge, many companies still use traditional in-person, instructor-led training, which doesn’t move fast enough or scale quickly enough to meet the ever-increasing demand.
PS disrupts the in-person models by offering a cloud-based technology learning platform that is broadly accessible. Learners on its platform can quickly acquire today’s most valuable technology skills through high-quality learning experiences delivered by subject-matter experts, available on any device at any time.
Its cloud-based technology learning platform provides a broad range of tools, including skill assessments, a curated library of courses, learning paths, and business analytics. The platform is powered by Iris, a proprietary machine-learning driven skill assessment algorithm and recommendation engine, which enables businesses to more effectively quantify and develop skills across technologies. Its platform is used by businesses to train their software developers, IT professionals, data scientists, data engineers, technical engineers, business users, and technology executives. The platform is also used by individuals to develop and enhance their technology skills.
There are a couple initiations that stand out. For instance, one of the more bullish notes is JP Morgan's Overweight initiation and $33 target -- 30% higher than the current stock price. First Analysis also put a $33 target (Overweight) on PS, commenting that it expects the company to achieve sustained 30%+ top-line growth and views its business as an attractive "land and expand" model as it adds seats within the existing customer base. The highest price target, though, came from SunTrust, which assigned a Buy and $34 target on the stock (+38%).
On the cautious side, Morgan Stanley gave PS an Equal Weight and its price target of $26 essentially says that the firm believes the stock is fully valued. Given the prominence of Morgan Stanley, and, the cautious price target, this initiation is likely to garner plenty of attention, and it could offset the more bullish initiations. Additionally, BofA Merrill Lynch put a Neutral on PS with a target of $28, a modest 10% above the current price.
PS has been one of the more impressive IPOs over the past few months. It's a rarity among growth IPOs as its top-line growth is escalating, making it an appealing opportunity. While most of the initiations today landed on the positive side, the stock has made quite a run and some traders could take a "sell-the-news" position and lock in some gains. Should that happen, a profit-taking pull-back can be viewed as a healthy development in the stock though, opening the possibility for investors to take another look at the stock once the dust settles.