Nomura Securities on Global Software: Q1 Preview on SAP, MSFT & CHKP
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Price: $205.43 --0%
Rating Summary:
48 Buy, 20 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
48 Buy, 20 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on Global Software: Q1 Preview
Analyst, Rick Sherlund, said, "While business in Europe has likely become more challenging for most software companies, we believe expectations have been set conservatively. Business conditions in the Americas appear to remain stronger. The rebound in IT spending in 2011 has created more difficult y/y comparisons, so growth rates will likely be slower in 2012 at this later stage of the IT spending recovery. We prefer stocks with new or upcoming product cycle momentum like SAP and Microsoft and names that are younger and at a more robust growth stage such as salesforce.com (NYSE: CRM) and Cornerstone OnDemand (Nasdaq: CSOD). We also like the security software space where there is a dynamic market with mission critical technology and a reasonable valuation, favoring Check Point Software. We are very positive on the fundamentals, but less positive on the valuations of VMWare (NYSE: VMW) and Fortinet (Nasdaq: FTNT). Oracle (Nasdaq: ORCL) should work out later this year as the hardware business finally turns around and they get the cloud."
SAP (NYSE: SAP) (Buy); upcoming events to highlight growth initiatives: We see upside to consensus license revenue expectation based on historical seasonal patterns and our strong industry checks. In addition to earnings, SAP is scheduled to host a series of events that will feature new products and strategies. The database and mobile strategy webcast on 4/10 (1PM EDT) and SAPPHIRE in Orlando from 5/14 to 5/16 with the financial analyst day on 5/15 should be positive events for SAP.
Microsoft (Nasdaq: MSFT) (Buy); Four major new products ship later this year: We are now two quarters away from the launch of several strategic and high-margin products, starting with Windows 8 in October. We are bullish on CY’13, anticipating a rich year of new products in Microsoft’s three most profitable divisions that will begin to drive estimates higher. For the March quarter, we are expecting an in-line print on low expectations and feel that there may be some upside to our numbers.
Check Point (Nasdaq: CHKP) (Buy); Conservative expectations and low multiple stock: We remain buyers of Check Point into 1Q’12 earnings as the market is underestimating the shift to annuity contracts around NGFW functionality and, thus, underestimating forward-year revenue and financial performance. These conservative billings and revenue expectations coupled with a low multiple provide upside potential for the stock, in our opinion.
Analyst, Rick Sherlund, said, "While business in Europe has likely become more challenging for most software companies, we believe expectations have been set conservatively. Business conditions in the Americas appear to remain stronger. The rebound in IT spending in 2011 has created more difficult y/y comparisons, so growth rates will likely be slower in 2012 at this later stage of the IT spending recovery. We prefer stocks with new or upcoming product cycle momentum like SAP and Microsoft and names that are younger and at a more robust growth stage such as salesforce.com (NYSE: CRM) and Cornerstone OnDemand (Nasdaq: CSOD). We also like the security software space where there is a dynamic market with mission critical technology and a reasonable valuation, favoring Check Point Software. We are very positive on the fundamentals, but less positive on the valuations of VMWare (NYSE: VMW) and Fortinet (Nasdaq: FTNT). Oracle (Nasdaq: ORCL) should work out later this year as the hardware business finally turns around and they get the cloud."
SAP (NYSE: SAP) (Buy); upcoming events to highlight growth initiatives: We see upside to consensus license revenue expectation based on historical seasonal patterns and our strong industry checks. In addition to earnings, SAP is scheduled to host a series of events that will feature new products and strategies. The database and mobile strategy webcast on 4/10 (1PM EDT) and SAPPHIRE in Orlando from 5/14 to 5/16 with the financial analyst day on 5/15 should be positive events for SAP.
Microsoft (Nasdaq: MSFT) (Buy); Four major new products ship later this year: We are now two quarters away from the launch of several strategic and high-margin products, starting with Windows 8 in October. We are bullish on CY’13, anticipating a rich year of new products in Microsoft’s three most profitable divisions that will begin to drive estimates higher. For the March quarter, we are expecting an in-line print on low expectations and feel that there may be some upside to our numbers.
Check Point (Nasdaq: CHKP) (Buy); Conservative expectations and low multiple stock: We remain buyers of Check Point into 1Q’12 earnings as the market is underestimating the shift to annuity contracts around NGFW functionality and, thus, underestimating forward-year revenue and financial performance. These conservative billings and revenue expectations coupled with a low multiple provide upside potential for the stock, in our opinion.
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