MW Analysts embrace ServiceTitan's market-share potential in parade of buy ratings

By Steve Gelsi

The software maker for blue-collar businesses, which recently went public, draws 'buy' or 'overweight' ratings from at least six analysts

ServiceTitan Inc.'s potential to grow, by providing software to help tradespeople such as landscapers and plumbers run their businesses, was a key theme in a series of recent positive ratings moves by analysts.

ServiceTitan (TTAN) went public at $71 a share on Dec. 12, and has seen its stock hit a high of $112 a share and a low of $94.02 since then.

"We see ServiceTitan as a clear market-share beneficiary in a historically underdigitized 'trades' industry," said KeyBanc Capital Markets analyst Jason Celino. "With limited competition, a large $13 billion [addressable market] and category-leading gross retention, we believe ServiceTitan checks all the right boxes to be considered a premier vertical software company, with meaningful long-term growth and margin runway."

Other analysts expressed similar conclusions about potential growth for ServiceTitan.

Celino assigned an overweight rating to ServiceTitan, while Trust analyst Terry Tillman and Stifel analyst J. Parker Lane initiated coverage of the stock with buy ratings. Three other brokerage firms also rated the stock a buy or overweight, while two issued neutral or hold ratings on ServiceTitan.

Several of the analysts assigned a price target of $120 a share for the stock.

Jay Ritter, a finance professor at University of Florida who specializes in initial public offerings, said it's not unusual for analysts to come up with the same price target for a company in their initiations of coverage.

"Price targets tend to use round numbers - it is rare to see a price target of $119 rather than rounding off to the nearest multiple [of] $5," Ritter told MarketWatch. "Also, most price targets are based on a percentage increase in the stock price. In other words, analysts don't start with a blank slate and come up with a price target that ignores the current stock price, especially if it is a buy or hold recommendation."

The analysts who assigned buy or hold ratings set their price targets about 15% above ServiceTitan's latest stock price, which closed at $105.79 in the previous session on Friday.

The $120 price target measures out at a relatively modest level due to concerns that the stock has already posted a large gain from its $71 IPO price, Ritter said.

Five other banks also launched coverage of ServiceTitan on Monday.

The most optimistic price targets of $125 a share came from Wells Fargo and Piper Sandler. Both banks also assigned overweight ratings to ServiceTitan, according to data from FactSet.

Loop Capital's hold rating and Goldman Sachs's neutral rating for ServiceTitan stood out as the least bullish assessments on the stock. Loop Capital set a price target of $105 a share, while Goldman set a price target of $100 a share, according to FactSet.

ServiceTitan's stock was falling more than 5% to $100.20 a share on Monday.

Read: ServiceTitan's IPO prospectus

-Steve Gelsi

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January 06, 2025 14:56 ET (19:56 GMT)

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