Netsuite (N) & SuccessFactors (SFSF) Could Rival Salesforce.com (CRM) & Concur Technologies (CNQR)
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Over the weekend, Barron's reported Netsuite (NYSE: N) and SuccessFactors (Nasdaq: SFSF) could rival Salesforce.com (NYSE: CRM) and Concur Technologies (Nasdaq: CNQR) as the only two pure-play Saas stocks available
SaaS is where the software is run out of the vendor's data center instead of being installed on the customer's computer. It is basically "Web-based software," because it is delivered over the web.
Barron's said two of the highest priced stocks in terms of valuation are Salesforce.com, which is up 56% in the last year, and which fetches between 35 and 40 times the company's projected FCF, and Concur Technologies, which has doubled in the last year and has a similarly high multiple.
Both of the above stocks trade at much higher multiples that tech stars such as Apple (Nasdaq: AAPL) and Microsoft (Nasdaq: MSFT), which trade at about 17 times free cash flow.
Barron's says Salesforce and Concur are trading at such large premiums for a couple reasons, including:
1. Large growth ahead
2. Until recently, these were the only 2 public "software as a service" stocks.
The two new companies to join the fray are Netsuite, which came public December 20, SuccessFactors, which came public a month earlier. Both Netsuite and SuccessFactors sell programs similar to Salesforce's.
Pacific Crest Securities analyst Brendan Barnicle initiated coverage last week on SuccessFactors with an Outperform rating, saying that with 2 million users, SuccessFactors is "the world's largest on-demand application provider."
SuccessFactors and Netsuite hope to enjoy the same public success as Salesforce and Concur.
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SaaS is where the software is run out of the vendor's data center instead of being installed on the customer's computer. It is basically "Web-based software," because it is delivered over the web.
Barron's said two of the highest priced stocks in terms of valuation are Salesforce.com, which is up 56% in the last year, and which fetches between 35 and 40 times the company's projected FCF, and Concur Technologies, which has doubled in the last year and has a similarly high multiple.
Both of the above stocks trade at much higher multiples that tech stars such as Apple (Nasdaq: AAPL) and Microsoft (Nasdaq: MSFT), which trade at about 17 times free cash flow.
Barron's says Salesforce and Concur are trading at such large premiums for a couple reasons, including:
1. Large growth ahead
2. Until recently, these were the only 2 public "software as a service" stocks.
The two new companies to join the fray are Netsuite, which came public December 20, SuccessFactors, which came public a month earlier. Both Netsuite and SuccessFactors sell programs similar to Salesforce's.
Pacific Crest Securities analyst Brendan Barnicle initiated coverage last week on SuccessFactors with an Outperform rating, saying that with 2 million users, SuccessFactors is "the world's largest on-demand application provider."
SuccessFactors and Netsuite hope to enjoy the same public success as Salesforce and Concur.
Subscribe to StreetInsider Now & Get The News Before Everyone Else!
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