RBC Following Latest Selloff In Software Stocks: Focus On Disruptors
RBC Capital Markets recently issued a report on the software industry following the most recent decline within the software index. Matthew Hedberg and Ross MacMillian highlighted ServiceNow Inc (NYSE: NOW), salesforce.com, inc. (NYSE: CRM) and Proofpoint Inc. (NASDAQ: PFPT) as companies that "have sold off but could be big outperformers on a two-three year view."
The Sector
RBC Capital markets noted that the decline in stock values within the software industry followed a generally well-performing earnings season, with many software firms providing in-line to better-than-expected earnings announcements. However, the analysts pointed out that one weakness for a majority of the firms that announced earnings was a slowing profit margin, which could reflect macroeconomic and currency headwinds.
With the recent decline in share values, analysts believe that this may be a sign of decreased earnings forecasts for 2016, as companies attempt to maintain profitability and achieve top-line growth.
Related Link: Suhail Capital Calls Ultimate Software "Most No Brainer Short" In Sector
A Few Good Names
RBC went on to recommend two "safe" stocks based on the strength of their fundamentals: Microsoft Corporation (NASDAQ: MSFT) and Oracle Corporation (NYSE: ORCL). With strong brand names, viable cash flow, and strong product demand, RBC sees these two companies as key players that can perform well even in challenging market conditions.
At The Time Of This Writing...
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Latest Ratings for NOW
Jan 2016 | Mizuho Securities | Downgrades | Buy | Neutral |
Dec 2015 | Goldman Sachs | Initiates Coverage on | Neutral | |
Nov 2015 | Pacific Crest | Maintains | Overweight |
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