Yahoo Finance Here's Why Sapiens (SPNS) is a Must-Buy Stock Right Now
Sapiens International SPNS is riding on its innovative SaaS portfolio, which is helping it win new customers and drive top-line growth. Its shares have returned 19.2% year to date, outperforming the Zacks Computer Software industry’s growth of 11% and the Zacks Computer and Technology sector’s return of 16.5%.
Sapiens’ bullish prospect is primarily backed by significant growth opportunities provided by the insurance sector. Its targeted total addressable market (TAM) is worth $60 billion, with a Property & Casualty (P&C) sector TAM of $27 billion and Life Pensions & Annuity (LP&A) of $33 billion.
Insurance IT spending is currently pegged at $208 billion, per Gartner, with $73 billion spent on P&C and $88 billion on LP&A domains. This massive expenditure offers significant growth opportunities to Insurtech providers like Sapiens.
Expanding product capabilities and a strong partner base that includes the likes of Microsoft MSFT are expected to help Sapiens generate healthy returns.
The company recently launched version 9 of its ReinsuranceMaster solution, which includes automating global inter-company retrocession, facilitating U.S. NAIC statutory reporting (Schedule F), and real-time reinsurance allocation support (‘reinsurance as a service’). The latest version also includes an integration between Sapiens Intelligence and ReinsuranceMaster.
Sapiens International Corporation N.V. Price and Consensus
Sapiens International Corporation N.V. price-consensus-chart | Sapiens International Corporation N.V. Quote
SPNS recently launched IntegrateAI, the newest capability from Sapiens Decision, integrating machine learning models into the business-friendly decision model workbench. IntegrateAI follows Sapiens Decision's recent ModelAI release, which brings a Generative AI copilot to decision modelers with integration to Microsoft Azure’s OpenAI Service.
Moreover, Sapiens Decision is planning additional AI-based products to support the full lifecycle of the decision modeling process, including ExtractAI (for extracting decision logic from legacy code) and OptimizeAI (to optimize business decisions for specific outcomes).
Sapiens currently sports a Zacks Rank #1 (Strong Buy) and carries a Growth Score of B, a combination that offers a good investment opportunity, per the Zacks proprietary methodology. A Momentum Score B makes the stock further attractive for investors at current level.
Expanding Clientele & Solid Partner Base Aids Prospect
Sapiens is riding on growing clientele as well as a strong partner base.
An expanding partner base that includes the likes of Microsoft, DataCrest, Binah.ai, Deloitte, PWC and LTIMindtree has been a key catalyst. Sapiens’ partnership with Microsoft has been a game changer. SPNS is one of the few selected vendors collaborating with MSFT on OpenAI.
SPNS’ expanding international footprint in the United Kingdom, Germany, the Caribbean and Canada is noteworthy.
Recently, Republic Life, a Caribbean-based company, adopted Sapiens CoreSuite for Life & Annuities and Sapiens Digital Suite hosted on Microsoft Azure cloud. Sapiens’ solutions enabled Republic Life Insurance to become the first Caribbean insurer to provide a fully digital, direct-to-customer offering.
Sapiens expanded its footprint into Canada on the back of its Saskatchewan Workers’ Compensation Board (WCB) partnership. Sapiens CoreSuite for Workers Compensation, Sapiens DigitalSuite, and Sapiens Intelligence will transform WCB’s core systems, streamline service delivery and enhance operational efficiency.
Meanwhile, BHSF, a U.K. “profit for good” health and wellbeing provider, has chosen to deploy the Sapiens Platform, including Sapiens IDITSuite for P&C and Sapiens DigitalSuite. German pet insurance brand Cleo also deployed Sapiens SCIPSuite to accelerate its underwriting, digital sales and go-to-market processes.
Sapiens’ Outlook Remains Positive
For 2024, the company still expects revenues between $550 million and $555 million. The Zacks Consensus Estimate for 2024 revenues is pegged at $553.45 million, indicating year-over-year growth of 7.55%.
Operating income is expected between $99.6 million and $102.7 million. SPNS still expects a non-GAAP operating margin between 18.1% and 18.5%.
The consensus mark for earnings is pegged at $1.48 per share, up 2.1% over the past 30 days, indicating 9.63% over 2023.
Other Stocks to Consider
Arista Networks ANET and Alphabet GOOGL are a couple of other top-ranked stocks in the broader sector, each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Year-to-date, shares of ANET and GOOGL have gained 34.2% and 27.3%, respectively.
Long-term earnings growth rates for Arista Networks and Alphabet are currently pegged at 15.68% and 17.21%, respectively.
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