New Relic (NEWR), mcap=$3.8bn, price $56.76 vs $48.17

– IT diagnostics provider at a material discount to peers and prior acquisitions in the application performance monitoring/observability space.
– Was in a difficult and lengthy (since 2019) business transition to a full-stack observability platform.
– Now at an inflection point with products finally competitive with other solutions in the market.
– Sticky and relatively price-insensitive customers.
– Downside limited given current valuation and with a number of potential strategic buyers.

– At 3.7x fwd revenue NEWR trades at a material discount to DDOG (18x), SPLK (5.3x), and DT (11.6x).
– Target of $87/share at 5x ’24 revenue with 20% revenue CAGR.

Exp. gain: +80% to $87/share in 3 years.

Full NEWR write-up (free guest account required):

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