Procore Technologies (NYSE: PCOR) experienced a significant boost in its stock price, rising by 6.1% after receiving a double upgrade from Scotiabank. The construction tech firm was upgraded to Sector Outperform from Sector Perform, with the price target (PT) increased to $80 from $70.
Scotiabank’s PT of $80 represents a premium of approximately 23% to the previous closing price. The firm’s analysis and industry conversations have provided them with increased confidence in Procore’s macro defensibility. They believe that any weaknesses experienced by Procore in the construction end-market during the first quarter are insignificant compared to the rest of the software space.
Although Procore’s lack of profitability remains a concern for investors, Scotiabank sees potential for growth and margin improvement. They noted that Procore has demonstrated better growth durability compared to its peers. Despite this, Procore’s year-to-date multiple expansion has been lower than the peer group.
Scotiabank did not anticipate any impact from Procore’s new fintech offerings in 2023. However, they have received positive feedback from customers who have piloted the new technology. Several customers have expressed a strong likelihood of adopting the new tech in 2024.
In summary, Scotiabank’s double upgrade and increased price target have driven Procore Technologies’ stock price up by 6.1%. The firm believes in Procore’s defensibility in the construction tech market and anticipates potential growth and margin improvement. Although Procore’s lack of profitability remains a concern, Scotiabank sees promising opportunities for the company’s future.
