Just a reminder for anyone watching Nuix that on 19 February 2024, Shaw & Partners issued an update to their coverage of Nuix with a $2.40 price target. As far as I can tell they have not released anything since then, so with the share price pushing that valuation and absent any news flow one might expect trading headwinds if Shaw clients start trimming their positions.
A reminder that the valuation is fraught, and depends on the multiple 3.5x-4.0x revenue holding up which is based on:
- The reduction or cessation of legal action and associated costs, as well as
- Sturdy top line sales growth of at least 10%
There are of course multitude other factors but I think if either of the above falter, even a little bit, that the share price will be punished.
Regardless, I consider Nuix software to be strategically important and will continue accumulating on any deep drawbacks so long as they are releasing new modules, winning new customer logos and keeping retention numbers high.