Jefferies Out With Top Software Picks for 2020: 4 Large-Cap Leaders to Buy Now
This top software and cloud technology stock continues posting new highs, and the company has a massive $133.8 billion sitting on the balance sheet. Microsoft Inc. (NASDAQ: MSFT) manufactures, licenses and supports a wide range of software products. It is also considered one of the best companies to work for.
The company has transformed its business model from a component-driven model (PC, server) to one driven by the need for cloud capacity. The cloud was big in the 2019 earnings reports and will remain a growing part of the software giant’s earnings profile.
Many Wall Street analysts agree that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offerings, and which continues growing at triple-digit levels. Some have flagged Azure as the biggest rival to Amazon’s AWS service. Other analysts maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger users.
The Jefferies analysts note that the stock is expensive, but they do feel it can “grind” to their target price over the course of 2020.
Microsoft shareholders receive a 1.25% dividend. The $175 Jefferies price target compares with the $166.97 posted consensus price objective. The stock closed most recently at $163.28 per share.
This top company reported solid fiscal 2019 results as billings have drastically improved, and this past quarter was no exception. Salesforce.com Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide. It also has one of the most valuable brands in the world.
It offers enterprise cloud computing applications and platform services, including Sales Cloud that 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.
In addition, Salesforce announced last year it has completed its acquisition of Tableau Software, bringing together the world’s number one customer relationship management company with the world’s number one analytics platform.
Jefferies has set a strong $210 price target. The posted consensus target price is lower at $193.25, and the shares were last seen changing hands at $183.85 apiece.
Shares of these top companies have had substantial runs over the past couple of years. With fourth-quarter earnings about ready to hit the tape, it may make sense to buy partial positions here and see how the results come in. The good news for investors is that they are all leaders in their specific categories and should remain that way for years to come.