After a blockbuster debut, Duck Creek Technologies (NASDAQ:DCT) has not been able to keep its promise of giving strong returns to its investors. The company is grappling with several headwinds like high inflation levels, geopolitical issues, and staffing concerns. Also, the overall pessimism in the market, due to the rising interest rate environment, might have weighed on DCT stock, which has already lost 60.1% so far this year.
What Does Duck Creek Do?
Boston-based Duck Creek is a prominent low-code SaaS provider of core systems for the property and casualty (P&C) insurance industry. The company’s portfolio offering is built on its advanced technology foundation, the Duck Creek Platform, which aims at enhancing the operational efficiency of insurance processes like policy administration, claims management, and billing.
A Snapshot of DCT’s IPO
Duck Creek became a member of the Nasdaq after an upsized initial public offering (IPO) of its 17,250,000 shares of Class A common stock for $27 per share. Through the IPO, the company raised $429.2 million in net proceeds (after deducting underwriting discounts and commissions and offering costs).
Shares of the company closed at $40 on the first day of trading (on August 14, 2020), up nearly 48.1% from the IPO price. DCT’s stock touched its all-time high closing price of $59.36 in February 2021.
Presently, Duck Creek commands a market capitalization of $1.61 billion.
Recent Developments at Duck Creek Look Promising
The software company has been witnessing solid customer engagement, along with rising interest in transitioning core systems to the cloud. Duck Creek has also been making efforts to expand its offerings and business relationships. The company widened integration with Verisk (VRSK) by adding its new accelerator, Verisk’s Lightspeed Small Commercial, which will support DCT’s customers in doing business with small businesses that need quotes rapidly.
Expanding its presence in the Asia-Pacific (APAC) region, the APAC regional product development team of the company has launched some software packages and implementation accelerators for the New Zealand insurance market.
Further, to provide insurers with remote property intelligence and risk management solutions, Duck Creek has collaborated with Betterview.
During the last reported quarter, the company announced striking a major deal with a mid-market personal lines insurer for its complete OnDemand portfolio.
The company has also taken strategic initiatives to deepen its partner ecosystem. In this regard, it expanded its strategic relationship with Microsoft by making its cloud-based, SaaS delivery solution, Duck Creek OnDemand, available on the Microsoft Azure marketplace.
Is Duck Creek Technologies a Buy?
As of now, Duck Creek Technologies seems to be a decent Buy. The Street is cautious but optimistic about the stock, which carries a Moderate Buy consensus rating on TipRanks.
Interestingly, DCT stock scores a ‘Perfect 10’ on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the market. Also, financial bloggers are 75% Bullish on DCT stock, compared to the sector average of 66%.
TipRanks data shows that hedge funds, too, are positive about the company, as they have bought 2.2 million shares of DCT stock in the last quarter.
Key Takeaways for DCT Investors
Duck Creek is making efforts to expand its portfolio offerings and grow inorganically. The management remains confident about the company’s long-term growth potential and profitability. Further, Duck Creek’s average price forecast of $18.17 implies upside potential of 46.1%. However, the company is facing several macroeconomic headwinds. Lastly, with the company lowering its guidance for the Fiscal Year 2023, investors may want to observe the stock for some time.
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