Credit Suisse Reinstates Outperform On Callidus Software, Views Recent Stock Offering Positively

Credit Suisse has resumed coverage of Callidus Software Inc. (NASDAQ: CALD) with an Outperform rating and $22 price target, as it is positive on the company's recent secondary offering.

Lead analyst Michael Nemeroff views the offering as helping the company make technology acquisitions to boost its SEM/SPM product suites, in addition to improving Callidus' liquidity to fund future R&D initiatives and sales & marketing investments.

The analyst believes such investments "could support strong +30 percent on-demand revenue growth over the next few years, at least."

Related Link: Dougherty & Company Downgrades Callidus Software To Sell

"We view CALD shares as attractive due to the company's: (1) best-of-breed, fully integrated product suite, which competes against mostly point solutions, (2) significant cross-sell / up-sell opportunity of multiple products into its existing customer base (only 400 out of 4,800 are using multiple CALD products)," Nemeroff wrote in a note.

Nemeroff also highlighted the company's improved margin profile and the transition to 100 percent subscription revenue, leading to "multiple expansion over time as CALD becomes more of a pure-play SaaS vendor."

Nemeroff maintained his revenue estimates for 2016 and 2017 of $205.0 million (+18.4 percent year-over-year) and $240.3 million (+17.2 percent year-over-year). But, he cut his EPS estimates to $0.27 and $0.35 from $0.28 and $0.37, respectively, to reflect dilution from the offering.

Shares of Callidus Software closed Friday's trading at $18.88. At time of publication Monday, Callidus was down 3.18 percent at $18.28.

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