Despite Tableau Software's Crash, Pacific Crest Stills Sees Value In Stock

• Tableau Software Inc DATA shares plunged 37 percent in after-market trading on February 4.
• Pacific Crest’s Brent Bracelin maintained an Overweight rating for the company, which reducing the price target from $138 to $93.
• Following the decline in Tableau Software’s shares, due to a decelerating growth trajectory, the stock implies positively biased risk-reward, Bracelin stated.

Tableau Software reported license revenue of $133.1 million, missing consensus expectation. Growth slowed down to 31.3 percent, from an LTM average of 66.5 percent. “Seat expansion within the existing installed base grew at a slower pace than prior periods, analyst Brent Bracelin said.

Since there were no changes in competitive win rates, management cited a higher level of customer caution as the reason for the lagging performance.

New customer adds increased 36 percent to 3,600. “Landing new customers remains surprisingly strong, despite increasing competition from lower-priced alternatives [like Microsoft Corporation MSFT PowerBI],” Bracelin wrote.

The EPS estimates for 2016 and 2017 have been reduced from $0.55 to $0.28 and from $1.03 and $0.93, respectively. The analyst commented that the estimates for the next three years had been reduced reflecting that “a combination of external and internal factors” would result in 25-30 percent growth is “the new normal” for Tableau Software.

Despite the reduction in forecasts, Bracelin said that “we are buyers of DATA.” He added, “We still see value in owning a profitable, high-quality software franchise that should still benefit from increasing adoption of data analytics.”

After the huge pullback in shares after hours to $52, the stock implied “a positively biased risk-reward on a high-quality growth stock that still faces favorable secular tailwind,” the Pacific Crest report added.