Coupa Software Downgraded to Underperform at RBC Capital

RBC Capital analysts downgraded Coupa Software Incorporated (NASDAQ:COUP) to underperform from sector perform and lowered their price target to $55 from $65 as macro pressures and execution issues make near-term challenging.

First, the analysts see a challenging macro environment ahead for the company, which they expect to manifest in decelerating growth. Second, the analysts have concerns on the roll-up nature. While M&A is not inherently bad, especially in software, the analysts noted that the company has acquired 15 companies in the last five years, many of which are still not fully integrated. Furthermore, the more time passes, the worse the Llamasoft acquisition looks (high services attach, meaningful on-prem revenue, questionable execution).

Furthermore, the analysts view the combination of contracting margins and decelerating growth as unattractive. The analysts said they struggle to underwrite a return to sustainable 25%+ organic revenue growth, let alone the 30%+ bulls still hold onto.