William Blair & Company initiated research coverage of E2open, Inc. (EOPN $12.22), which provides SaaS supply chain collaborative execution solutions, with an Outperform rating and Aggressive Growth company profile.
Analyst Laura Lederman estimated that the company would increase revenue 18% to $70.4 million in fiscal 2013 and 22% to $85.6 million in fiscal 2014.
"The total available market in E2open's core verticals (high tech, telecommunications, and consumer packaged goods [CPG]) is about $6.5 billion, according to management, and its opportunity in all markets is roughly $17.7 billion," Lederman said. "Using these figures, E2open is less than 1% penetrated and has a significant opportunity to add clients in its core and noncore verticals. Based on William Blair's analysis of businesses in the Forbes Global 2000, we believe E2open's readily addressable market in its core verticals is about $1.7 billion and in all verticals is about $5.4 billion."
She added, "E2open can increase its revenue through multiple avenues. The first is up-selling its existing base of customers; management estimates that the company is less than 20% penetrated in its client base. Second, the company can add customers in existing verticals (high tech, telecom, and CPG) and new markets, such as medical devices and life sciences. E2open also plans to expand internationally; it has been investing in it its operations in EMEA and China. Lastly, the company can expand into the middle market (companies with about $2 billion in revenue) and divisions of larger companies."
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Market Perform (Hold): 34%
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