Apps & Software

Top Analyst Says Software Stocks Are Expensive Now: 5 High-Value Conviction Buys


This company blew away Wall Street recently with a gigantic $27.7 billion purchase of Slack Technologies. Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide.

Salesforce’s enterprise cloud computing applications and platform services include Sales Cloud, which enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around sales on desktop and mobile devices.

The company also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as connect their service agents with customers on various devices, and Marketing Cloud, which enables companies to plan, personalize and optimize customer interactions.

Last year, Salesforce completed the acquisition of Tableau Software, bringing together the world’s number one customer relationship management company with the world’s number one analytics platform. Salesforce aims to enhance its digital advertising value proposition (and its other existing product offerings) by expanding its data footprint to become the pioneer supplier of a consumer data platform for the corporate market.

Goldman Sachs noted this they added it to the Conviction List:

Salesforce remains poised to be one of the most strategic application software companies in the $1 trillion total addressable market cloud industry, in our view. With a broad and expanding platform that spans sales, service, ecommerce, marketing, Business intelligence/analytics, artificial intelligence, custom applications, integration, and collaboration, we view Salesforce as well positioned to capitalize on accelerated digital transformation spending, as enterprises across verticals grapple to form a holistic view of their customers across an increasingly complex customer journey involving multiple touchpoints and channels.

The $315 Goldman Sachs price target compares to the $275.31 consensus target and Monday’s final print for stock of $225 a share.


This is a top tech pick across Wall Street. Splunk Inc. (NASDAQ: SPLK) provides a software platform for collecting, storing, indexing, searching and analyzing machine-generated data, such as log files and configuration files, which are prevalent in every type of IT system, device and application.

Splunk technology is potentially applicable and disruptive in several market segments, including IT operations, security and compliance, and business intelligence. These market segments are collectively worth $28 billion today.

Wall Street analysts agree that the company offers the de facto standard for security information and event management. It also offers orchestration solutions for security operations, a fast emerging category of products.

Goldman Sachs has set a $215 price target. The consensus target is $193.88, and Splunk stock ended Wednesday at $135.48 per share.

These are five top software stocks that Goldman Sachs sees as reasonable values, and all have very solid upside potential to the firm’s price targets. With first-quarter earnings right around the corner, it may make sense to buy partial positions now and see how April starts to shape up. The market remains very overbought and expensive, so caution still is in order.

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