With most of the top enterprise software stocks finished reporting their fourth-quarter numbers, Wall Street and investors look to 2014. While many of the top firms we cover are guardedly optimistic, one firm thinks that 2014 should be much better than last year. The analysts at Stifel just completed numerous meetings with the top companies at their recent Technology, Internet and Media Conference in San Francisco. They came away feeling very positive about their top names to buy.
They see information technology budgets rising this year, and that is the key. To the Stifel team, it was clear from their conference that we are just at the earliest stages of the next major architectural shift (i.e., client server to the cloud) in computing. They think that cloud computing and software-as-a-service are moving well beyond early adopters and into the mainstream. That is ultimately where corporations make massive budget commitments. The top names will be first in line to benefit.
Here are the top enterprise software stocks to buy for the rest of this year.
Citrix Systems Inc. (NASDAQ: CTXS) is a top-rated stock to buy at almost every Wall Street firm that we cover. IBM’s software unit missed earnings bad last year and Citrix is poised to grab business in this arena. While IBM’s Financial Services revenue declines also worsened slightly during the fourth quarter, it had the best relative performance as compared to the other verticals. The Stifel analysts believe this also bodes well for Citrix, which generates about 20% of revenue from the segment. The Stifel price target for this top-rated stock is $74, and the Thomson/First Call consensus target is $64.26. Citrix traded at $57.06 early Tuesday.
Concur Technologies Inc. (NASDAQ: CNQR) is a leading provider of integrated travel and expense management solutions. Concur’s easy-to-use Web-based and mobile solutions help companies, federal agencies and their employees control costs and save time. Concur’s open platform enables the entire travel and expense ecosystem of customers, suppliers and developers to access and extend Concur’s T&E cloud. The Stifel price target is $140, and consensus stands way below that at $116.93. The stock traded at $124.70 Tuesday morning.
Exa Corp. (NASDAQ: EXA) develops, sells and supports simulation software and services to enhance product performance, reduce product development costs and improve the efficiency of design and engineering processes. The company’s simulation solutions enable its customers to gain crucial insights about design performance early in the design cycle, thus reducing the likelihood of expensive redesigns and late-stage engineering changes. The Stifel price target is $18.50, and consensus target is $16.83. Exa traded at $14.91 early on Tuesday.
Red Hat Inc. (NYSE: RHT) provides open source software solutions primarily to enterprise customers worldwide. The company develops and offers operating system, middleware, virtualization, storage and cloud technologies. The stock remains a favorite of CNBC’s Jim Cramer, and it is expected to show strong sales gains the rest of this year. The Stifel price target for this industry leader is $63. The consensus target is $61.94. Red Hat traded at $58.64 in early market action.
TIBCO Software Inc. (NASDAQ: TIBX) is a top stock to buy at Stifel. Near term, the Stifel analysts think the company should see a multi-quarter increase in sales productivity, where they believe upward estimate revisions are likely. With fourth-quarter revenue climbing 6% year over year and 10% sequentially, TIBCO continues to do an adequate job of balancing growth expectations with meaningful share gains. What’s more, TIBCO is doing this in an environment in which Wall Street is ready to applaud low single-digit revenue performances. The Stifel price target is $29. The consensus price target is $25.85. TIBCO traded at $21.47 early Tuesday.
Teradata Corp. (NYSE: TDC) is a global leader in analytic data platforms, marketing applications and consulting services that help organizations become more competitive by increasing the value of their data and customer relationships. The company beat analysts’ estimates for fourth-quarter revenues and earnings. The Stifel price target is $59, but the consensus is much lower at $50.84. The stock traded near$43.70.
Ultimate Software Group Inc. (NASDAQ: ULTI) is a leading cloud provider of people management solutions with more than 15 million people records in the cloud. Ultimate’s award-winning UltiPro delivers HR, payroll, talent, compensation and time and labor management solutions that seamlessly connect people with the information and resources they need to work more effectively. The Stifel price target is $182, and the consensus is at $169.80. Shares traded at $164.29 early Tuesday.
The analysts at Stifel believe that “big data” and the Internet of Things are at an even earlier stage of adoption and productization. They also think many enterprises and vendors are still trying to figure out these topics and how to effectively use new technology to gain insights from these new data sources. They get the sense that many early adopters are just starting to pilot and test new big data solutions from various infrastructure vendors. If that is indeed the case, then huge orders could he headed the way of the top enterprise software companies.