OneStream Inc. (OS) has a pretty compelling pitch if you're still running financial software that looks like it was designed when people thought Y2K would end civilization. Rosenblatt Securities thinks the company could grow revenue nearly 20% annually over the next few years while dramatically improving its profitability.
Fresh Take on Legacy Systems
Analyst Robert Simmons initiated coverage with a Buy rating and a $26 price target, arguing that OneStream is methodically winning business from companies trapped on outdated financial systems. The addressable market is surprisingly huge: roughly 15,000 companies still using Oracle's Hyperion platform, plus thousands more limping along on similar legacy products from SAP and IBM. Then there are countless others piecing together financial close, consolidation, and reporting processes with basic ERP tools and Excel spreadsheets.
That's a long runway for growth, Simmons noted in his initiation report. OneStream's platform is "modern, integrated, and highly usable," which turns out to be a powerful competitive advantage when your rivals are decades-old systems that nobody particularly enjoys using.
The Path to Profitability
The analyst expects both existing and new products will help OneStream expand its addressable market and generate subscription growth north of 20% for several years. Better yet, Simmons projects non-GAAP operating margins could reach 10% and cash flow margins could hit 20% by 2027 as the company scales.
OneStream shares traded up 2.33% at $21.09 on Tuesday. The company carries a $3.97 billion market cap and has traded between $16.51 and $32.04 over the past 52 weeks, reflecting the typical volatility you'd expect from a growth-stage software company navigating a competitive landscape.
