Mizuho: After Industry Consolidation, Cloudera Emerges As A Buy

Favorable trends earned the software name Cloudera Inc (NYSE: CLDR) an upgrade from Mizuho. 

The Analyst

Mizuho Securities analyst Abhey Lamba upgraded shares of Cloudera from Neutral to Buy and raised his price target for the shares from $18 to $21.

The Thesis

The adoption trends and the penetration opportunity appear favorable, Lamba said in a Tuesday note. (See the analyst's track record here.) 

"At the margin, we believe the stock could re-rate as management builds more credibility in the public markets (with strong results thus far)," the analyst said. 

The recent exit by competitors from the Hadoop Stack data market suggests favorable pricing trends in the near-to-medium term, Lamba said. 

Mizuho's checks show the industry discounting is "in line with recent past," the analyst said. Cloudera is pushing for early renewals and three-year enterprise license agreeements, which could support billings growth in 2018, Lamba said.  

The checks revealed incremental traction in the cloud service platform Altus, while cloud workloads are largely test or developmental in nature, according to Mizuho.

The research firm also sees strong momentum for Hortonworks Inc (NASDAQ: HDP) in the enterprise space, as the International Business Machines Corp. (NYSE: IBM) partnership yields results.

The Price Action

Cloudera shares are up merely 1.3 percent since the company's April 28, 2017 IPO. 

At the time of publication, shares were jumping 6.05 percent at $18.22. 

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