4 Reasons Why This Coupa Software Analyst Is Turning Very Bearish; How Company Is 'Lacking Competitively'

Coupa Software Inc COUP faces significant near-term challenges, due to macroeconomic pressures and execution issues, according to RBC Capital Markets.

The Coupa Software Analyst: Rishi Jaluria downgraded the rating for Coupa Software from Sector Perform to Underperform, while reducing the price target from $65 to $55.

The Coupa Software Thesis: The macro environment challenges could result in decelerating growth at the company, Jaluria said in the downgrade note.

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The analyst mentioned three other reasons for the rating change:

• “Coupa has acquired 15 companies in the last five years, many of which are still not fully integrated,” he wrote.
• The combination of contracting margins and decelerating growth is “unattractive.”
• Coupa Software is not a true Business Spend Management platform.

“Although we view Coupa's cloud-native B2B procurement software as best-in-class, most of the other modules are acquired and, often, lacking competitively,” Jaluria stated. “To drive accelerated migrations from SAP, we believe Coupa has to develop stronger solutions outside the core B2B procurement, which could take time if management is willing to commit to it, instead of buying businesses,” he added.

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COUP Price Action: Shares of Coupa Software were down 6.91% to $63.09 at the time of publication Monday.