Guidewire’s Current Environment Is Stable, With Long-Term Opportunity Intact; FVE Still $95

Guidewire hosted an analyst day and provided updates on its cloud transition progress and other strategic initiatives, along with a re-examination of its long-term operating model, which was unchanged. The meeting was largely uneventful after the midterm target reduction on the fourth-quarter earnings call last month. We were relieved to hear the environment has not deteriorated further in the last two months. Accordingly, our investment thesis is unchanged and we are maintaining our wide moat rating and $95 per share fair value estimate. We still view Guidewire as the leader in core software systems for the property and casualty insurance market and that the transition to the cloud is better for the company, its customers, and investors alike. While our model shows upside from current levels, we would prefer to invest in cleaner stories such as ServiceNow and Salesforce given macroeconomic uncertainty.