SEMR
Semrush Holdings, Inc.
$12.00
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 43.2% below fair value
You pay
$12.00
Bear
$10.76
Fair
$21.13
Bull
$33.49
Bear
$10.76
-10.4%
14% rev growth, 21% terminal margin
Fair
$21.13
+76.1%
23% rev growth, 28% terminal margin
Bull
$33.49
+179.1%
30% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (23%) × margin expansion to 28%
Terminal Value % of EV
61%
Implied Market Multiple
3.5x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $13.80 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $21.13 per share.
Warnings
Gross margin of 81% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $13.80 (from 7 analysts). Our estimate is 66% above the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep