Jefferies Cuts Software Price Targets Across the Board, Highlights Names With Least Downside

May 24, 2022 6:36 AM EDT

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Jefferies analyst, Brent Thill, cut price targets in the software sector, virtually across the board expecting another drop in fundamental estimates stating "Software multiples continue to correct, contracting 52% YTD and trading at 6.7x CY23 rev. vs the historical average of 8x. Despite the recent downdraft, we believe there could still be downside to multiples as fundamentals could weaken into a recessionary environment." "Our revisions are highest among names that fall in one of the following categories: 1) exposure to interest rate volatility, 2) exposure to Europe, 3) products with high ASPs, 4) deferred software, 5) high SMB exposure, 6) consumption based models, or 7) outlier multiples."

Companies highlighted with the least downside: MSFT, DDOG, ESTC, NET, VRNS, CHKP, CRWD and S

Companies cut by 25% or more: TEAM, SNOW, DDOG, SUMO, ESTC, NET, SMAR, ASAN, VRNS, CRWD, S, WDAY, and ZUO

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