Technology investors, especially those with stakes in the software segment, have enjoyed an outstanding first half of this year. In fact, 2019 is reminding some top Wall Street analysts of the first half of last year, especially in terms of expanding multiples, earnings and sales estimates being revised and how the current cycle in the sector compared to prior peaks.
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A new Deutsche Bank research report is laser-focused on four of the top small/midcap software stocks, which may be the place for aggressive accounts to be positioned for the rest of the year. The report noted this:
Despite the continued pattern of out performance across a cluster of names, we remain selective in terms of our recommendations – favoring those companies with solid competitive positioning selling into large total addressable markets which we think are supportive of more durable growth profiles.
With an average return for some of the stocks in the Deutsche Bank SMID universe of a stunning 40%, multiples are somewhat lofty, so they are selective in what they like going forward. We profile the four top companies they recommended, all better suited for aggressive accounts with higher risk tolerance.
Mimecast
The Deutsche Bank team is very positive on this smaller cybersecurity company. Mimecast Ltd. (NASDAQ: MIME) provides cloud security and risk management services for corporate information and email.
The company offers Mimecast Email Security services, including targeted threat protection that extends traditional gateway security to protect organizations against targeted attacks and audit and reporting, and it enables administrators and security specialists to monitor and report attempted attacks. Mimecast also offers URL Protect, which tackles threats from emails containing malicious links.
Last year the company introduced the latest capability of its Targeted Threat Protection service, Internal Email Protect. It is the first-to-market cloud-based security service providing threat capabilities for internally generated email. Internal Email Protect allows customers to detect and remediate security threats that originate from their users’ email accounts.
The Deutsche Bank price target on the shares is $52, while the Wall Street consensus target is $55.94. The shares closed trading Tuesday at $48.92.
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