It’s time to consider scooping up shares of a little-known software play, according to Morgan Stanley. Analyst Josh Baer upgraded shares of CCC Intelligent Solutions to overweight from an equal weight rating, saying that Wall Street is “underpricing value” of the company’s portfolio of artificial intelligence products. CCC is a “software as a service” provider specializing in the property-casualty insurance sector and working with insurers and collision repairers. Services the company provides include incident detection, telematics and repair management. CCCS YTD mountain Shares this year “CCCS is a market share leader, positioned to capture value digitizing and automating the [property and casualty] Insurance industry,” Baer wrote. “Established solutions, ramping emerging solutions and AI help to sustain high-single-digit growth.” Shares of the company are up about 4% this year, rising more than 3% Wednesday morning. The firm lifted its price target to $15 from $14, reflecting 30% upside from Tuesday’s close. According to Baer, sentiment toward the stock has turned overly sour despite the company’s compelling suite of AI products, “quite durable” core offering and “best-in-class operational efficiency” that should support margin growth. He expects earnings before interest, taxes, depreciation, and amortization margins to potentially exceed 50%, anticipating 100 basis points of expansion in 2025 and 2026. CCC’s shares have also underperformed those of its vertical software peers, offering an attractive valuation discount and entry point relative to competitors, the analyst noted. “Bottom line, a track record of durable growth, the impending ramp of more material emerging solutions revenue in FY25, and consistent margin expansion ahead leave us buyers on an overdone share pullback,” Baer said.
