An unusually large dark pool print was detected in SMAR stock on August 30, 2019. The large dark pool print was reported at 12:02 PM (Pacific) for 229K shares at $47.80 for a value of $10 million.
The large dark pool block order looks like a buy right at the low of day on August 30, 2019.
Institutional investors have increased their long positions by 28% over the previous 3 month period.
Smartsheet Inc. is a cloud-based platform, which provides collaboration and work management solutions. The Company provides cloud -application for project management and collaboration. Its work management tools enable to track and organize work, use a template, share with collaborators, set alerts and reminders, track discussions, view change history, create summary reports, customer information, sales pipelines, event schedules, and business processes.
On August 15, 2019, Smartsheet announced that Smartsheet Gov has achieved a Federal Risk and Authorization Management Program (FedRAMP) Provisional Authority to Operate (P-ATO). With this designation, Smartsheet is approved for use by federal agencies and government contractors and listed in the FedRAMP Marketplace.
FedRAMP is a government-wide program that provides a standardized approach to security assessment, authorization, and monitoring for cloud services. Smartsheet Gov was prioritized by the Joint Authorization Board (JAB) last year for provisional authorization, as part of the FedRAMP Connect program and based on demand from federal agencies.
“Federal agencies are asking for help to modernize workflows and processes, drive the effectiveness and pace of intra- and inter-agency collaboration, and deliver better experiences for citizens,” said Mark Mader, CEO of Smartsheet. “We’re proud to achieve a FedRAMP P-ATO and look forward to helping make this transformation in government a reality.”
Smartsheet Gov is a secure solution that enables federal agencies to organize and scale processes, streamline workflows and automate repetitive but critical tasks, built on Amazon Web Services’ (AWS) GovCloud.
“We congratulate Smartsheet on reaching this important milestone,” said Dave Levy, Vice President of U.S. Federal Government at AWS. “By building on AWS GovCloud, Smartsheet and their government customers may host sensitive data and regulated workloads, while meeting stringent US government security and compliance requirements.”
Smartsheet has an incredible average annual revenue growth over the last 5 years of 44%.
On August 30, 2019, Wedbush analyst Steve Koenig said he expects continued subscription revenue momentum from Smartsheet this year, “driven by strong net-dollar based retention, churn reduction, success penetrating larger customers, and momentum with “Capability” based offerings.” The analyst added that longer-term outlook also looked promising, if the company could build brand awareness among business buyers. Koenig maintained an Outperform rating and $62 price target on Smartsheet.
On August 22, 2019, Stephens analyst Ryan MacWilliams assumed coverage of Smartsheet with an Overweight rating and $55 price target.
On July 11, 2019, Needham analyst Scott Berg raised his price target on Smartsheet to $60 and kept his Buy rating after his visit to the company’s HQ on July 10, 2019, saying the discussions increased his confidence in his belief that the firm can grow its revenues by 40% or more over the next two or more years. The analyst contends that the Collaborative Work Management market is still in the early stages and features “little direct competition”, adding that Smartsheet’s M&A capacity and “robust” product roadmap will allow it to stay ahead of the “less flexible” solutions of the competition.
Smartsheet will release its financial results for its second quarter of fiscal year 2020 ended July 31, 2019 after the close of U.S. financial markets on September 4, 2019.
SMAR stock does not meet the minimum requirements for inclusion in the GST Portfolio. The company still has no P/E and no Forward P/E ratio because they don’t yet have positive earnings. The stock trades at a market cap of $5.7 billion but they only did $197.6 million in sales last year. The book value of SMAR stock is $1.54 and yet the stock trades at $48.60. The stock is overvalued IMO. SMAR stock trades at a P/S of 29.2 and a P/B of 31.5. Like most stocks on Wall Street, the revenue growth caused traders to pile into the stock and now it’s trading in bubble territory IMO. Imagine what’s going to happen to overpriced technology stocks like this if we go into a recession. Obviously, a big investor that used the dark pool to buy $10 million worth of this stock on August 30, 2019, does not agree with my valuation metrics. Does this investor know something big that we don’t? Perhaps a big government contract coming their way now that they are government certified? Did Amazon make a secret offer to buy the company in the wake of the government certification? Anything is possible.
A fair value for SMAR stock for me is at the $22.50 level which would reduce the market cap to around $2 billion. The company has yet to do even a quarter of $1 billion in sales, let alone $2 billion but if government contracts pick up it’s possible to do $2 billion in sales within the next 6 years so I’d be willing to pull sales 5 to 6 years forward in my fair value multiple but nothing beyond that.
Disclosure: We do not hold any position in SMAR stock.