At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.
But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.
Qlik here to buy it now
eBay invented the Web button to "buy it now." Soon after, Amazon.com perfected the process, creating a button that will buy, and pay for, your most soon-to-be-cherished shopping desires in one easy step. All you need now is to decide what to buy, and it can be yours at the click of a button. And today, UBS took the final step: Making the "click" of the buy button, and item being bought, one and the same.
All of which is my roundabout way of trying to say that this morning, the Swiss megabanker recommended that you log on right now and buy some shares of Qlik Technologies
Describing Qlik as an "emerging business intelligence (BI) vendor disrupting the traditional BI landscape with an easy to use, yet powerful data analysis tool," UBS thinks this company could ultimately capture more revenues in the business intelligence market than there currently are in said market. Quite literally, UBS expects Qlik's business to outgrow the $9.2 billion currently being spent on competing products. For a company that last year pulled in $226 million in total revenue, that's a bold statement. But what are the chances UBS is right?
Qlik at your own risk
At first glance, I'd have to say those chances are not good. I mean, just look at the valuation on this stock! Eighty times last year's free cash flow and 110 times reported GAAP earnings. Even if Qlik manages to hit the 25% long-term annual growth target Wall Street has set for it, those are some pretty big numbers, and Qlik is a pretty expensive stock. And yet ...
Let's go to the tape
This is not some punter of a stock analyst we're talking about here, recommending that you buy Qlik Technologies -- this is UBS. This is an analyst that, according to our CAPS records, has outperformed 90% of the investors on the planet over the past five years. A banker that does particularly well in the software industry, where it's successfully outperformed the market on 60% of its picks, historically, racking up big gains on software shops like Oracle, Adobe, and Tibco:
UBS's Picks Beating
|Adobe||Outperform||***||4 points (and picked four times)|
|Tibco Software||Outperform||**||182 points (!)|
Now, it's true that Qlik faces stiff competition in the market for business intelligence software. IBM
It's also worth pointing out that UBS isn't the only advisor out there recommending Qlik. The Fool's own Motley Fool Rule Breakers newsletter has done so, too, praising the company for developing a "loyal customer base," and pointing out that Wall Street hadn't yet noticed the stock (in fact, we found it nearly six months before UBS did.)
Foolish final thought
And that's what's really interesting about Qlik. In many ways, you see, this company reminds me of Omniture -- a stock previously recommended by Rule Breakers lead analyst David Gardner, and a stock that I long derided as overpriced -- right up to the time that Adobe decided to pay that price and buy it.
You see, while I personally would never lay down money on a stock as "obviously overpriced" as Qlik, I can't help but notice that in contradicting me this morning, UBS used language that was eerily reminiscent of that which appears in many recommendations from Rule Breakers. Qlik is:
- "Selling a disruptive product that has solved an unsettled problem for business users."
- "Leading the disruptive BI market."
- "Opening BI software to everyone," and perhaps most importantly
- "Appealing to strategic and financial acquirers."
Sound like a rule-breaker to you? It sure does to David and his crew.
Fool contributor Rich Smith does not own (nor is he short) shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 582 out of more than 170,000 members. The Motley Fool has a disclosure policy.
Microsoft is a Motley Fool Inside Value selection. Qlik Technologies is a Motley Fool Rule Breakers pick. Adobe Systems, eBay, and Amazon.com are all Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Adobe Systems. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of International Business Machines, Microsoft, and Oracle.
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