Enfusion Stock To Remain Range-Bound In 2024 Amid Stable Hedge Fund Market: Goldman Sachs Analyst Downgrades Stock

Goldman Sachs analyst Gabriela Borges downgraded Enfusion Inc ENFN from Neutral to Sell and lowered the price target from $9 to $8.

While the stock has already underperformed the NASDAQ by 54% over the last 12 months, the analyst expects the stock to be range-bound in 2024. 

Street estimates reflect 10 points of acceleration in revenue over the next 12 months, and Borges is more conservative with her modeling assumptions at 3 points. The analyst is 5% below the Street on revenue for 2025. 

Her industry conversations suggest that the outlook for hedge funds is stable (rather than improving or deteriorating) — and against this backdrop, Borges noted Enfusion's re-acceleration will need to be driven by company-specific improvements, such as faster market share gains within or outside of the hedge fund TAM. 

The analyst noted it would likely take longer for Enfusion to deliver on these company-specific drivers and expect Customer Acquisition Cost (CAC) to remain elevated over the next three years vs. historical levels as Enfusion focuses on converting larger funds and building out adjacent functionality. 

Borges noted that converting existing funds into brownfield opportunities requires more resources vs. landing new hedge funds in greenfield opportunities. Enfusion already has a dominant position with the latter, and given the higher switching cost and level of resourcing, existing funds must navigate. 

She will gauge how quickly product and go-to-market improvements can drive more material growth to become more positive on the stock.

Borges projects fiscal 2023 revenue and EPS of $173.2 million (prior $173.7 million) and $0.14 (unchanged).

Price Action: ENFN shares traded lower by 6.327% at $8.74 on the last check Wednesday. 

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