UBS Picks Top Tech Software Stocks to Buy During Earnings Season

With the massive tech sell-off knocking down some top names 25% to 50% in recent weeks, most Wall Street firms are confirming a shift from high-beta momentum stocks to large cap value stocks and other big tech that underperformed last year. In a new research report, the analysts at UBS make the call that now is the time for investors to start scaling in to a select group of high-growth software names. Their work indicates that first-quarter estimates for the top names could prove conservative, and Wall Street expectations have become very muted after the significant sell-off.

Here are some of the top high-growth software names to buy now at UBS.

Concur Technologies Inc. (NASDAQ: CNQR) is a leading provider of integrated travel and expense management solutions, and it was crushed in the sell-off. 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 UBS price target for the stock is $135. The Thomson/First Call estimate stands way below that at $116.47. The stock closed Monday at $92.35.

Fortinet Inc. (NASDAQ: FTNT) is becoming one of the top hot names around Wall Street, with more and more firms picking up coverage. The UBS analysts expect the company’s guidance was set low, as the current CFO has suggested that Wall Street should at least see in line billings for the quarter. That is an important metric for the stock, and security has become one of the most critical technology areas in recent years. The UBS price target is $26, while the consensus target is $25.67. Fortinet closed Monday at $21.80.

Informatica Corp. (NASDAQ: INFA) makes the UBS list as a value play in the fast emerging Big Data space. While the company outperformed smartly in 2013, the UBS team sees its execution in Europe as the key for continued growth. With relatively easy licensing comparisons for the quarter, the company may meet or exceed current expectations. UBS warns though the company may model for lower revenue growth. UBS has a $49 price target, and the consensus is at $46.77. Informatica closed Monday at $38.28.

Microsoft Corp. (NASDAQ: MSFT) held up much better during the sell-off and is now considered old tech. In fact, the stock has hit 13-year highs as Wall Street has embraced new CEO Satya Nadella and his planned changes and direction for the venerable company. The UBS team thinks that Microsoft will continue to remain in favor as its outperformance in enterprise sales versus the competition, combined with other new product success, keeps investor interest high. Investors are paid a 2.8% dividend. The UBS price target is $46 and the consensus is at $40.01. Microsoft closed Monday at $39.94.

Qlik Technologies Inc. (NASDAQ: QLIK) is another fast-rising tech name catching buzz on Wall Street, as well as catching a big sell-off recently. The company’s QlikView Business Discovery platform lets people quickly bring data sources together to create dynamic visual applications that can be navigated and searched intuitively. QlikView uses Natural Analytics to reflect the way human curiosity searches and processes information, while delivering the enterprise manageability, governance and service offerings organizations require. The UBS price target is $37, and the consensus target is $32.23. The stock closed Monday at $25.53.

VMware Inc. (NYSE: VMW) has been on fire and is a leader in cloud storage software. Their cloud computing service is a new offering for their customers. The company’s vCloud Hybrid Service has not been designed or marketed as a standalone public cloud as of yet. With a huge customer base, and a low 5% penetration of the huge $50 billion Technology Acceptance Model market, the analysts feel that growth can reaccelerate this year and beyond. The UBS price target is $115, and the consensus target is $110.38. The stock closed Monday at $104.84.

Violent sell-offs seem to take the air out of everybody’s tires as investors and analysts become increasingly worried that aggressive selling becomes a bear market. For companies that deliver earnings in line or better than expectations, the path higher should be considerably easier after the recent mark down in stock prices.

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