Smartsheet: Launching Coverage With a $53 Fair Value Estimate and a Narrow Moat Rating

We launch coverage of Smartsheet with a $53 fair value estimate and a narrow moat rating. Smartsheet is a leading provider of collaborative work management, or CWM, software-as-a-service solutions and enjoys high customer switching costs underpinning our moat rating. The emerging CWM SaaS niche aims to improve the efficiency and productivity of project and process management by displacing widely deployed but suboptimal incumbent tools of email and spreadsheets. While we expect multiple CWM vendors to capture share of the expansive addressable market for purpose-built project management tools, we believe Smartsheet is well-placed to rapidly expand within existing clients and become the enterprise, IT-certified vendor of choice. At current prices, Smartsheet shares screen as undervalued, trading at a hefty 25% discount to our fair value estimate.