Shares of Demandware Inc (DWRE) are flat at $74.82 before Thursday’s market open, as Barclays raised its price target to $75 from $43 and maintained its “equal weight” rating on the stock.
The firm’s readjustment this morning comes after Salesforce.com (CRM) offered to acquire the Burlington, MA-based enterprise-class cloud commerce solutions provider for $2.8 billion last week. If approved, the deal is expected to close by July 31.
“We think that Demandware is a solid addition for Salesforce, as it is the premier SaaS e-commerce platform vendor. Salesforce is creating a new cloud called Commerce Cloud with Demandware at the core,” Barclays analysts said in an investor note.
Commerce Cloud will allow Salesforce to “attack the e-commerce market,” the firm stated.
“We made excellent progress against our 2016 goals, delivering on key customer, technology, and financial objectives,” stated Tom Ebling, CEO, Demandware. “We continue to expand up market, signing larger customers while driving above-market growth in our customer base. From a technology perspective, we rolled out meaningful enhancements to our platform, including enabling predictive recommendations for all digital customers, and remain on track to release Demandware Store to US customers in the fourth quarter. In addition, we were pleased to be named as a leader in the Gartner Magic Quadrant for Digital Commerce, the only cloud-based provider to be placed in this category, and a validation of our dedication and commitment to innovation and to our customers.”
Here’s what to expect for the rest of 2016:
Tim Adams remarked, “We are raising our 2016 revenue guidance by $3 million to reflect the first quarter out performance in services. With this additional services revenue, we are raising our guidance for operating income and net income by approximately$2 million. Otherwise, our guidance framework is consistent with the outlook we provided at the start of the year. We remain enthusiastic about the value we can bring to our shareholders and customers alike.”
The company has multiple weaknesses, which can be seen in diverse areas, such as its deteriorating net income, disappointing return on equity and feeble growth in its earnings per share.
Demandware was founded in 2004 by Stephan Schambach, an e-commerce pioneer. Stephan knew then what others realized many years later – that cloud technology would revolutionize retail. Stephan’s vision was to enable retailers and brands to break free of the shackles of traditional, legacy platforms and truly focus on what they do best – deliver great products and a great brand experience to its customers. In 2004, Demandware was the first to introduce an enterprise-class cloud ecommerce platform.
Today, Demandware’s industry-leading cloud platform is the digital backbone for hundreds of retail brands around the world, powering commerce across web, mobile, social and store channels. As the retail world has evolved, so have we. Our capabilities include digital commerce, order management, predictive intelligence and point of sale – all powered by the cloud. Our founding philosophy still applies today. We believe that competitive advantage and consistent revenue growth don’t come from managing IT infrastructure or developing software. They come from executing on the strategic initiatives that build brand loyalty and drive business expansion.