SolarWinds Shares Rise as Analysts Jump on Coverage

SolarWinds shares rose Monday after several analysts began covering the network management software maker, one of which called it "one of the strongest growth stories in software over the last three years."

Shares of Austin, Texas-based SolarWinds were up about 5 percent in trading Monday, after touching a new all-time high earlier in the session.

In a note to clients, Morgan Stanley analyst Adam Holt initiated coverage with an "Overweight" rating and $20 price target. That price target implies upside of 32 percent over its closing price Friday of $15.15.

"SolarWinds' low cost value proposition, substantial community, disruptive distribution model and large end markets should enable the company to maintain some of the highest growth and margins in tech," he said.

Meanwhile, Jefferies analyst Katherine Egbert began covering the stock with a "Buy" rating and $17.50 price target, suggesting growth of 15.5 percent.

Egbert pointed to a number of positives, such as the company's online distribution model, which helps keep overhead costs low.

The analyst also said SolarWinds defers almost 30 percent of new deals to recurring maintenance, which buttresses its revenue even though license weakness has been weak recently.

Jefferies acted as a co-manager in SolarWinds' IPO.