Clearwater Analytics (CWAN) – Core Business Strength and a Potential Catalyst Ahead
Clearwater Analytics (NASDAQ: CWAN) has had a rough 2025 so far, with shares down about 33% on concerns around its recent acquisitions—most notably Enfusion—and the pace of integration. But looking past those headlines, the core business remains a standout performer, and the current price could be offering an attractive entry point.
Clearwater provides cloud-based investment accounting, reporting, and analytics tools—services that continue to take market share from legacy solutions. The company’s core business has been consistently growing free cash flow by more than 20% annually, and management sees a multi-year runway for further gains. At today’s levels, if you strip out the value of Enfusion from the enterprise value, the core operation is effectively trading at around 31x free cash flow—a compelling valuation given its growth rate.
Execution risk from acquisitions is real, but much of that appears to be already priced into the stock. The next potential catalyst comes on September 3, when Clearwater will host its Analyst Day. With investor focus shifting back toward the company’s profitable core and its competitive advantages, any positive updates on integration progress or growth strategy could help re-rate the stock higher.
Goldman Sachs just upgraded CWAN to buy from neutral, maintaining its $27 price target, which implies more than 46% upside from Monday’s close. Street sentiment is strong—FactSet shows every analyst covering the stock rates it a buy, with a consensus target north of $31 and the most bullish estimate at $36.
In our view, Clearwater is a high-growth software name trading at a discount because of near-term integration concerns. If management delivers clarity and confidence at the September event, this could be one of the more compelling rebound opportunities in the software space heading into year-end.
