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Analyst Explains Why They Upgraded Their Rating on Avalara Inc (AVLR)


In a report released yesterday, Brent Bracelin from KeyBanc upgraded Avalara Inc (NYSE: AVLR) to Buy, with a price target of $47. The company’s shares closed on Friday at $34.93, close to its 52-week low of $32.10.

Bracelin commented:

“We are upgrading AVLR to Overweight based on a favorable risk-reward for a cloud software specialist that has durable growth prospects as it disrupts and modernizes sales tax compliance. The size, complexity, and manual process of complying with $1T in sales tax and VAT collections globally suggests this market is ripe for software automation. A negative short report has contributed to a 20% selloff over the last 10 days (vs. Nasdaq +0.9%) pressuring 4.4x our 2020 base- and bull-case scenarios, respectively, which appears overdone. We are establishing a $47 price target, which implies 35% upside potential based on 30x forward EV/CY22 FCF, discounted back at 15%. Opportunity knocks after 20% selloff on a negative short report. Shares traded off 20% in the last 10 days (vs. a negative short report.”

According to TipRanks.com, Bracelin is a top 25 analyst with an average return of 26.6% and a 78.7% success rate. Bracelin covers the Technology sector, focusing on stocks such as Tyler Technologies, Salesforce.com, and Everbridge Inc.

Currently, the analyst consensus on Avalara Inc is a Moderate Buy with an average price target of $47.

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Based on Avalara Inc’s latest earnings release for the quarter ending June 30, the company reported a quarterly GAAP net loss of $17.77 million. In comparison, last year the company had a GAAP net loss of $16 million.

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Avalara, Inc. provides cloud-based software services. It offers Avalara returns excise pro simplifies fuel tax compliance, enabling small and medium sized suppliers, distributors and terminal operators to reduce filing time and costs; Avalara avatax, the sales tax decision automation, instantaneously and accurately calculates tax; Avalara certcapture creates, validates and stores sales tax exemption certificates and reseller certificates in the cloud, limiting audit exposure; Avalara government automates end-to-end motor fuels tax filing processes for state tax authorities, growing tax revenue and eliminating labor-intensive activities; and Avalara mylodge tax is a automated solution for vacation rental homeowners seeking tax compliance for their vacation home rentals. The company was founded by Rory Rawlings, Scott McFarlane and Jared R. Vogt in 2004 and is headquartered in Seattle, WA.