In any market rally, momentum stocks tend to not only catch the eye of traders and investors, but they catch the eye of short-sellers as well. When the market rolled over in late February and early March, some of the biggest casualties were the momentum software names, especially the SaaS names that had gotten way ahead of themselves. In a new research report, the J.P. Morgan software analysts detail their meetings with key executives after they took a trip to Silicon Valley to sit down with numerous software companies.
J.P. Morgan does not have research coverage on all the companies they met with, but they did come away positive on the sector and for some companies going forward the rest of the year.
Guidewire Software Inc. (NYSE: GWRE) is a stock covered by J.P. Morgan, and it is rated Overweight. The company provides system software to the property and casualty insurance industry primarily in the United States, Canada and Australia. It provides Internet-based software platforms for core insurance operations, including underwriting and policy administration, claim management and billing. Europe is seen as a key growth segment for the company in fiscal 2015. The J.P. Morgan price target for this top name is $58. The Thomson/First Call consensus target is $52.40. The stock closed Wednesday at $38.44 a share.
RingCentral Inc. (NYSE: RNG) is a leading provider of cloud-based business communications solutions. Easier to manage and more flexible than on-premises communications systems, RingCentral’s cloud solution meets the needs of modern distributed and mobile workforces, while eliminating the expense and complications of on-premises traditional hardware-based systems and software. J.P. Morgan does not cover the stock, but the firm sees the company expanding distribution through carrier relationships and geographic expansion among the keys to growth going forward. The consensus price target for the stock is $21.25. RingCentral closed trading Wednesday at $13.29.