Stocks to Buy Before They Join This Market Rally: Apptio (APTI)
YTD Performance: -32%
The Apptio Inc (NASDAQ:APTI) IPO in September actually went pretty well. The offering priced at $16, above an estimated range of $13-$15. Shares gained 41% on the first day of trading. Analyst initiations in October were relatively bullish, with targets all above $20.
And since then, it’s been just about straight down for APTI stock.
Truthfully, it’s not entirely clear why. Apptio’s SaaS platform is used to measure SaaS spend for companies, allowing them to better understand ROI and other investment calculations. The cloud space remains reasonably solid at the moment: high flyers like Splunk Inc (NASDAQ:SPLK) and Workday Inc (NYSE:WDAY) have gained nicely year-to-date. And Apptio beat analyst estimates in both Q3 and Q4 — though the stock sold off following Q4 earnings.
Apptio isn’t profitable, and APTI stock isn’t cheap, or low-risk. But a barely 2x revenue multiple on an enterprise basis represents a substantial discount to most SaaS stocks, and guidance for double-digit growth in 2017 suggests Apptio still has room, and time, to grow into its valuation.
At some point, the same investor and analysts who liked APTI stock at $20-plus in 2016 will like it again at $12 in 2017.