DWREpullback by TechStockProspector


									                                    Robert DeFrancesco’s
                            Tech-Stock Prospector
April 11, 2014

BMO Capital Upgrades Demandware (DWRE) on Pullback
BMO Capital today upgraded shares of Demandware (DWRE, $52.44)—a provider
of cloud-based e-commerce solutions used by retailers and brands—to ‘Outperform’
with a price target of $70 based on accelerating subscription growth, enterprise
bookings momentum and confidence in the management team’s ability to execute.

Demandware delivers a set of enterprise-class merchandising applications on a
mission-critical cloud platform. With the company’s solutions, customers are able to
easily design, quickly implement and totally manage their own customized e-
commerce sites—including websites, mobile applications and digital storefronts.

The alternative, maintaining an in-house solution behind a firewall, can be pricey
and inefficient; some of the drawbacks include a lack of scalability, the inability to
fully customize and no real upgrade cycle.

Demandware, which targets potential customers with annual online sales ranging
from as little as $2 million at the low end to more than $300 million, has a total
addressable pool of roughly 3,500 companies in North America and 2,500 across

As of the end of 2013, Demandware had 204 customers live on its platform, a 35%
increase from the year-ago level (and up from 184 at the end of the third quarter),
with 820 live sites (up 42% year over year). Contract backlog (made up of unbilled
committed minimum subscriptions plus deferred revenue) stood at $348.6 million,
an increase of 67% from the year-ago level.

In the recent market pullback, Demandware shares have dropped 36% from the all-
time high of $82.23 reached on March 5. At that peak, the forward revenue multiple
was 21.

With the market cap back down to $1.88 billion, the stock now trades at 13 times
the 2014 consensus revenue estimate of $144.3 million (the high estimate on Wall
Street is $151.5 million).

Download the April 2014 issue of Tech-Stock Prospector to your Amazon Kindle
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Here are some of the topics covered in the April 2014 issue:

*Is it time to buy momentum stocks again?
*3 high-growth names to watch
*On the Radar: 4 emerging software vendors
*Data Breach! A way to play growth in smart cards
*Gauging the uptake of the mobile wallet
*Facebook searches for the next social networking hot spots
*Match Game: Why IAC/InterActiveCorp rules online dating
*Salesforce still delivering impressive growth
*Cloud View: Ultimate Software sets ambitious growth targets
*Workday continues to disrupt the HR/HCM software market
*New products are major contributors for Aruba Networks
*Small-Cap Feature: Imperva secures the datacenter
*Why the shift to the cloud is causing new security concerns
*IT Security Focus: Several reasons to be bullish on Fortinet
*Intel invests big in Big Data
*A promising Cisco Systems/Akamai partnership
*Apple preps for massive iPhone 6 upgrade cycle
*Are activist investors going to take on Symantec?
*Deal Report: Analyzing the GrubHub IPO

Order the April 2014 issue of TSP here:

Tech-Stock Prospector Managing Editor Rob DeFrancesco has more than 20
years of experience covering the tech sector. He is a former senior writer with
Louis Rukeyser’s Wall Street.

TechStockProspector.com, launched in 2003, is an investment-research service
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