Guidewire Software (GWRE) Moves 6.0% Higher: Will This Strength Last?

Guidewire Software GWRE shares ended the last trading session 6% higher at $144.08. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 16.5% loss over the past four weeks.

The increase in share price can be attributed partly to some market optimism as well as company-specific tailwinds.

One of the most important drivers of Guidewire’s performance has been its transition to a cloud-based subscription model. Its cloud business is fueled by rising demand from insurers moving away from legacy systems toward cloud-based solutions. In the last reported quarter, it signed eight new cloud deals.
The strength of adoption is reflected in annual recurring revenues (“ARR”) growth of 22% year over year, or 21% on a constant-currency basis, reaching $1.063 billion.

Focus on enhancing the Guidewire Cloud platform with new capabilities, including digital frameworks, automation, tooling and other cloud services, is expected to boost sales of subscription-based solutions in the long haul.

International momentum further strengthens the bullish narrative. Frequent product launches are also a tailwind. Management has added two new applications, PricingCenter and UnderwritingCenter, to the Insurance suite, along with PolicyCenter, BillingCenter and ClaimCenter. These new applications address highly fragmented and manual processes that directly affect insurers’ loss ratios, speed to market, and profitability. GWRE is also integrating AI across solutions to boost operations.  The acquisition of ProNavigator strengthens Guidewire’s AI strategy.

In January, GWRE announced a new share repurchase plan worth $500 million after completing its previous authorization.

Driven by strong revenue performance, GWRE expects total revenues for fiscal 2026 to be between $1.403 billion and $1.419 billion compared with $1.202 billion in fiscal 2025.

This provider of software to the insurance industry is expected to post quarterly earnings of $0.77 per share in its upcoming report, which represents a year-over-year change of +51%. Revenues are expected to be $342.52 million, up 18.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Guidewire Software, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on GWRE going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Guidewire Software is a member of the Zacks Internet - Software industry. One other stock in the same industry, VNET Group VNET, finished the last trading session 3.4% lower at $11.39. VNET has returned 4.4% over the past month.

VNET Group's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.04. Compared to the company's year-ago EPS, this represents a change of +500%. VNET Group currently boasts a Zacks Rank of #4 (Sell).

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This article originally published on Zacks Investment Research (zacks.com).

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