Coupa Software stock price target raised to $200 from $130 at Mizuho

Coupa Software has seen its stock price soar since going public in September of last year, but now it seems that, despite its reasonable valuation, Coupa is entering a period of tempered optimism, according to analysts at Mizuho. The Wall Street firm led a project to predict how Coupa’s financial results would look after Q1, and revised its price target upwards from $130 to $200.

Mizuho analysts are mainly bullish on the company’s subscription revenue-guidance, but are “skeptical about whether Coupa’s model can persist if the margin outlook deteriorates.” Coupa’s guidance calls for roughly 33 percent GAAP margins in 2019, which Mizuho thinks is in danger of slipping when the company feels the need to make significant investments in its platform in response to competitor demands.

Read more: Coupa shares surge on strong user feedback, set to post unicorn valuation

Mizuho’s target price could prove too high, though. Coupa raised its fiscal 2019 revenue guidance from $270 million to $292 million, nearly 13 percent year-over-year growth. At that pace, Coupa will struggle to meet its target of $350 million in sales in 2020, according to analysts at Barclays. When Coupa reported its quarterly results in April, the company’s chief financial officer told investors that quarterly sales would exceed $150 million.

Perhaps the biggest part of Barclays’ pitch is that Coupa’s existing investments — and not the price of its initial public offering — will cause Coupa to slide back into the red in the back half of 2019. Coupa reported a Q1 loss of $16.9 million, a solid improvement over the company’s net loss of $39.1 million for the same quarter in 2018. In fact, Coupa said in April that its revenue will rise to at least $352 million in 2020, breaking through the $500 million mark in 2021.

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