{"id":36331,"date":"2023-07-16T06:35:55","date_gmt":"2023-07-16T10:35:55","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/smartsheet-buy-the-correction-its-an-overreaction-nysesmar\/"},"modified":"2023-07-16T06:35:57","modified_gmt":"2023-07-16T10:35:57","slug":"smartsheet-buy-the-correction-its-an-overreaction-nysesmar","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=36331","title":{"rendered":"Smartsheet: Buy The Correction, It’s An Overreaction (NYSE:SMAR)"},"content":{"rendered":"
\n

<\/picture>
<\/figcaption><\/figure>\n<\/p>\n

Markets are hot again. Investors have cheered the cooldown in inflation data, hoping that will lead to an end of the Fed’s historic rate hikes. Amid lower rate expectations, the dollar has weakened and stocks have soared, particularly in the growth space, leading many investors to wonder if there’s still room for upside left.<\/span><\/p>\n

My strategy here is to chase laggards, particularly among “growth at a reasonable price” stocks. Smartsheet (NYSE:SMAR<\/span>), in my opinion, is one incredibly appealing candidate for this trade. Up only 6% year to date after suffering a bruising recent correction after releasing Q1 results, I think Smartsheet is a great rebound play.<\/p>\n

\n

\"Chart\"
Data by YCharts<\/figcaption><\/figure>\n<\/p>\n

Focus on the long term rather than this quarter’s billings<\/h2>\n

I remain very bullish <\/strong>on Smartsheet. While I acknowledge that the company is facing growth headwinds (mostly macro driven, and more a function of the challenging macroeconomy for enterprise software companies rather than Smartsheet-specific execution concerns), I think the stock’s recent fall from the ~$50s is a gross overreaction to recent results.<\/span><\/p>\n

In a nutshell: the markets panned Smartsheet’s deceleration to 20% y\/y billings growth, even though the company had forecasted 20% full-year billings in its initial guidance (and held its outlook there). <\/strong>While billings is certainly a great long-term growth indicator that captures deals to be recognized as revenue in future quarters, we also have to acknowledge the fact that it’s an imperfect metric, influenced by the timing of deal closings and contract duration lengths – which may make billings a very lumpy metric. In other words, one quarter’s deceleration may not spell continued doom for Smartsheet.<\/p>\n

When we take a step back from the short-term noise surrounding Smartsheet, I find that the long-term bull case for this stock is still very much vibrant and relevant:<\/p>\n