This more off-the-radar idea has the biggest upside potential of all the Conviction List stocks. Qualtrics International Inc. (NYSE: XM) operates an experience management platform to manage customer, employee, product and brand experiences worldwide. It was founded in 2002 and is headquartered in Provo, Utah. Qualtrics is a subsidiary of SAP America.
The company offers the Qualtrics Experience Management Platform, a system of action that guides users with specific instructions for improvement and automated actions to improve experiences, as well as for listening, understanding and taking action on both structured and unstructured data.
Qualtrics also provides professional services that primarily consist of research services, through its DesignXM, which allows customers to gain market intelligence, as well as implementations, configurations and integration and engineering services to help customers deploy its XM Platform.
Here is why Goldman Sachs is so positive:
We view Qualtrics as a market leader in Customer Experience, a segment of the customer relationship management (CRM) TAM that is growing in importance as customers leverage new pools of interactions data to optimize their own unit economics. We expect Qualtrics to benefit from net new budget as well as consolidation of spend from a long tail of fragmented vendors as a function of its technology breadth and depth, with key differentiators being its ability to process unstructured data and its integration with other action-oriented workflow tools. Lastly, we expect to see an inflection in FCF over the next 3 years as Qualtrics realizes productivity improvements from its 2018-2021 investment cycle into large enterprise and international.
The Goldman Sachs price objective is $40. The $36.53 consensus target is also well above Tuesday’s close at $12.92. The target would make Qualtrics stock a 165% upside winner.
These stocks are presented with the strong caveat yet again that the selling may not be over. However, with that in mind, starting to add partial positions over the next few months, then filling out full positions when there is a complete and final washout, makes sense. Plus, two of the companies are solid ideas for more conservative growth investors who may want to take a swing but would rather stay with well-known blue-chip sector leaders.
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