These 2 software stocks are new Top Picks at BMO
Investing.com -- BMO Capital Markets added ServiceNow and Gartner as new Top Picks, widening its focus beyond Okta, its sole Top Pick since early March.
"We are shuffling the deck in terms of our Top Picks by adding DT and NOW as we look to the balance of calendar year 2026," analyst Keith Bachman said in a note. BMO raised its price targets on both ServiceNow and Gartner, while leaving estimates unchanged.
Bachman said Okta’s stock performance year-to-date has left expectations elevated heading into its October quarter results, while ServiceNow and Gartner carry "less demanding near-term set-ups." BMO retained its Outperform rating across all three names, with Okta still carrying "potential for multiple years of accelerating revenue growth given the tectonic shifts in identity," Bachman wrote.
For ServiceNow specifically, the analyst said the near-term quarterly setup "is favorable." He projects third-quarter current remaining performance obligation growth of about 20% year-over-year on a constant-currency basis, and roughly 18.5% organic constant-currency growth, broadly in line with both guidance and consensus.
Actual organic growth could come in closer to 20%, consistent with the past two quarters, which would contrast with "the bear case of decelerating growth," Bachman noted.
Looking to the December quarter, Bachman flagged a tougher year-over-year comparison and expects guidance of about 19.5% constant-currency growth, "or even a touch below," though he still expects the overall trend to point to steady growth.
The analyst also highlighted ServiceNow’s push into security through its Armis and Veza acquisitions. He said both have "significantly outperformed expectations" since joining ServiceNow’s portfolio, with Armis closing deals more quickly within the company’s broader distribution.
Security & Risk was included in 16 of ServiceNow’s top 20 deals in the second quarter, including 24 deals over $1 million, and the business surpassed $1 billion in annual contract value. BMO expects similar momentum in the September quarter, calling Armis "both a direct growth driver and an enabler of broader Security & Risk demand."