Canaccord Genuity initiates coverage on Windward at ‘buy’

Analysts at Canaccord Genuity initiated coverage on software firm Windward with a ‘buy’ rating and a 305.0p target price on Monday, stating it spied growth on the horizon for the firm. Canaccord Genuity said Windward’s artificial intelligence-powered software-as-a-service platform leveraged predictive intelligence, best in class shipping data and industry expertise to provide “actionable insights on maritime risk”, noting the platform benefitted from a relatively low level of digital maturity, the desire to automate compliance processes to deal with ever-tightening sanctions, security and KYC due diligence rules and regulations, the need for better cargo/supply chain visibility, and increasing pressure on the industry to reduce its carbon emission footprint. The Canadian bank highlighted that with more than 250,000 commercial organisations across the maritime and related trade and financing ecosystems, the company estimates a long-term total addressable market of roughly £10.0bn and has delivered a 2018-20 revenue compound annual growth rate of 31%.

“Our analysis suggests Windward’s core compliance solution alone could support our current forecast of a ~30% 2021-24 sales CAGR. Successful execution to commercialise its new carbon emission and ocean freight /cargo visibility solutions that will launch later this year could on our estimates potentially accelerate annual growth to more than double this level,” said the analysts. “In our view, on 7.7x 2023 EV/Sales the shares trade at a justified premium to UK peers given our expectation for 30% organic growth.

We set our 12-month target price at 305p, based on a blend of a 2023 EV/Sales of 7x, a 30% premium to peers as well as the NPV of our bull case scenario that values the shares on 5x 2025 P/Sales assuming a 65% 2021-25 sales CAGR.

This scenario could be highly rewarding for investors as it would imply potential returns of ~220% to >700p/share over the next 3-4 years.”