Overview
Morgan Stanley downgraded Clearwater Analytics Holdings (NYSE: CWAN) from Overweight to Equalweight and lowered its price target to $24.55 from $27.00 after the firm concluded the go-shop period tied to the company's pending acquisition. The updated target equals the per-share deal price negotiated with the buyer group.
Go-shop activity and timeline
The go-shop period for Clearwater's proposed sale to a private equity consortium led by Permira and Warburg Pincus, with support from Francisco Partners and Temasek, ended on Friday, January 23. During that timeframe Clearwater solicited alternative offers from a total of 44 parties, comprising 20 financial sponsors and 24 strategic suitors, according to an 8-K filing. Six parties entered into confidentiality agreements but no competing bid was announced before the window closed.
The transaction, agreed at $24.55 per share and valuing the company at approximately $8.4 billion, remains subject to customary closing conditions and is expected to close in the first half of 2026.
How analysts are treating the deal
Morgan Stanley's revised price target of $24.55 reflects the agreed deal price and equates to roughly 19.6 times the firm's unchanged 2027 adjusted EBITDA estimate of $413.4 million for Clearwater. The firm moved its rating to Equalweight in light of the transaction's implications for public shareholders.
Other broker actions followed the acquisition announcement. UBS downgraded Clearwater from Buy to Neutral, and DA Davidson also moved its view to Neutral, citing the pending go-private transaction as a primary factor. By contrast, RBC Capital kept an Outperform rating and maintained a $36.00 price target. Separately, DA Davidson later reiterated a Buy rating with a $30.00 price target after reports that activist investor Starboard Value LP had acquired nearly a 5% stake and advocated for a full sales process.
Market pricing and valuation metrics
At the time of the analyst move, the stock was trading at $24.13, a level described as closely aligned with a Fair Value assessment available on the platform. Clearwater's current enterprise value to EBITDA multiple stands at 101.63x when calculated using the last twelve months' EBITDA of $76.79 million. That premium multiple coexists with notable top-line momentum - the company reported revenue growth of 50.91% over the same period.
Morgan Stanley's treatment of the deal price in its target implies the buyer group's $24.55 per share consideration equates to about 19.6x the bank's 2027 adjusted EBITDA projection for the company, based on the unchanged $413.4 million estimate for that year.
Investor and market reaction
The conclusion of the go-shop window without a competing bid has prompted several firms to adjust ratings and targets, reflecting the constrained optionality for public investors until the transaction closes. The expected closing in the first half of 2026 remains subject to customary conditions, and the deal price and timeline are the dominant reference points for current public-market valuation.
What remains uncertain
Key unresolved items are whether any late-developing offers emerge (none materialized during the go-shop) and the completion of customary closing conditions before the targeted first-half-2026 close. The company and the buyer consortium continue to operate toward that timetable.
Summary of facts
- Morgan Stanley downgraded Clearwater from Overweight to Equalweight and lowered its price target to $24.55 from $27.00.
- The go-shop period ended on January 23; Clearwater solicited proposals from 44 parties (20 financial sponsors and 24 strategic parties), with six confidentiality agreements executed.
- The acquisition agreement values Clearwater at approximately $8.4 billion at $24.55 per share and is expected to close in the first half of 2026, subject to customary closing conditions.