Wall St brokerages start SailPoint coverage with broadly bullish view, but see competition risk

FILE PHOTO: A banner for Sailpoint Technologies Holdings Inc. is displayed on the front of the New York Stock Exchange (NYSE) to celebrate the company's IPO in New York, U.S., November 17, 2017. REUTERS/Brendan McDermid/File Photo

(Reuters) - Wall Street brokerages on Monday started coverage on SailPoint Technologies with broadly bullish views, but some analysts warned that the identity security provider could face increased competition.

SailPoint, which was previously listed in 2022 before being taken private by growth capital firm Thoma Bravo, made a tepid return to the stock market in February. Morgan Stanley and Goldman Sachs led the underwriting for the initial public offering.

With the mandated "quiet period" over, Morgan Stanley, Goldman Sachs and J.P. Morgan started coverage of the stock with a "neutral"-equivalent rating, citing competition from CyberArk, Okta and Microsoft.

Despite competition risks, Morgan Stanley and Goldman called the firm a 'category leader' in the identity governance and administration (IGA) space. Brokerages like Jefferies, RBC and Piper Sandler had bullish views on the stock, projecting it to gain more market share.

"SailPoint is a share gainer in the growing identity security market ... however, we see limited upside near term as the multi-product story is still coming into fruition," Morgan Stanley analysts said in a note on Monday.

Shares of Thoma Bravo-backed SailPoint were last down nearly 5% at $20.97, below the company's market debut price of $23.

The tightening of data privacy regulations, an increase in global cyberattacks and the emergence of AI-driven cybersecurity threats have boosted demand for services offered by businesses like SailPoint.

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The company, with clients like General Motors and Hershey, helps them design and manage their security processes.

The U.S. IPO market's recovery has been rocky this year as investors are awaiting more policy clarity from U.S. President Donald Trump's new administration.

Following are the ratings and price targets for SailPoint from some of the major brokerages;

Brokerage Rating Price

Target

Goldman Neutral $23

Sachs

Morgan Equal $26

Stanley Weight

J.P.Morgan Neutral $25

BofA Buy $27.50

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(Reporting by Joel Jose in Bengaluru; Editing by Maju Samuel)