Mizuho Securities Adjusts Price Targets for Software Sector Ahead of Earnings, Highlights Top Picks Including Palantir

Stock News15:12

As the earnings season approaches, Mizuho Securities has adjusted price targets for several enterprise software companies, including Microsoft Corp (MSFT.US), Cloudflare Inc (NET.US), Datadog Inc (DDOG.US), Fortinet Inc (FTNT.US), and Rapid7 Inc (RPD.US).

Analyst Gregg Moskowitz stated, "Our second-quarter industry checks were overall positive. Public cloud/consumption data points were strong, and AI adoption remains robust. Furthermore, cybersecurity demand showed a slight sequential improvement after mixed first-quarter check results. Software-as-a-Service (SaaS) continues to demonstrate resilience, although valuation multiples are still pressured by investor concerns over AI-driven disruption."

He added, "We are adjusting some price targets. From a valuation perspective, the forward 12-month enterprise-value-to-sales (EV/Sales) multiple is currently about 30% below its three-year average. We believe the risk/reward for the next 12 months looks quite attractive, but we also continue to believe a higher level of unpredictability could present some unusual challenges and a particularly bumpy path. That said, heading into the earnings reports, our top, most-ownable June-quarter names are Palantir Technologies Inc (PLTR.US), Atlassian Corp PLC (TEAM.US), and ServiceNow Inc (NOW.US)."

Moskowitz raised the price target for Cloudflare from $260 to $310 and for Datadog from $220 to $300. The targets for Fortinet and Rapid7 were increased from $86 to $125 and from $8 to $11, respectively. Conversely, he lowered the price target for Microsoft from $515 to $490.

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