Sundry Photography/iStock Editorial via Getty Images Sumo Logic (NASDAQ:SUMO) could be worth as much as $17 per share if it were to be taken private, investment firm Jefferies said on Tuesday. Analyst Brent Thill, who has a hold rating on Sumo Logic (SUMO), noted the company has seen “underwhelming growth and negative profitability” and has a better shot of generating shareholder value if it were private. Thill, who raised the firm’s per-share price target to $11 from $8.50, also said the story for Sumo Logic (SUMO) over the past few quarters has been “incrementally positive,” accelerating revenue to the fasted in eight quarters, raising its operating margin guidance by 700 basis points for fiscal 2023 and delivering “beat and raises.” However, the company has struggled with execution and has had trouble gaining traction in customer adoption, Thill added. “It lacks the growth, efficiency, and platform capability to be a successful story in the current environment, in our view,” Thill wrote in a note to clients. Sumo Logic (SUMO) shares gained 8% in mid-day trading on Tuesday. Using a 5 multiple on enterprise value-over next 12 month sales would give the stock a $17 value, and since it is seen as a “inferior asset” in the observability and security space, it should get a multiple between 3 and 5. Sumo Logic (SUMO) surged 30% on Monday after it was reported that it had been approached by several private equity firms about going private.
