Tag Archives: ulti

Don’t Overlook 4 Top Tech Stocks Near Buy Point

Sifting through stock lists for a trend is always a sound strategy. Otherwise, you could miss a stock or group of stocks that are making a move. If you look at the industry group rankings for some of the software makers, for instance, you might be quick to dismiss them. The financial software group ranked No. 108 in Thursday’s list, down from No. 45 six weeks ago. Design software came in at No. 133 vs. No. 111 six weeks back, with enterprise software just behind at No. 134 vs. No. 112. One group improved: specialty enterprise software, at No. 120, up from No. 143. But drilling down to look deeper at which stocks make this week’s Tech Leaders, you might uncover a few gems that are near buy points. Citrix Systems ( CTXS ) is back in buy range from an 80 handle buy point initially cleared in April. More importantly, shares are finding support at the 10-week moving average, providing a secondary buy area. The stock spiked as much as 12% on April 22 before settling for a 4% gain, after the business software maker reported Q1 earnings that beat views and raised its full-year outlook. Florida-based Citrix belongs to the specialty enterprise software group. Paycom Software ( PAYC ) provides a cloud-based employment management platform with a software-as-a-service business model. Shares, near the top of a buy zone from a 38.28 cup-with-handle entry, have been rising past resistance around the 40 level, a positive sign. The base was a much steeper than normal 51%, which increases risk. But the stock’s relative strength line is near highs. Paycom hails from the enterprise software group, as does Ultimate Software ( ULTI ). Ultimate, which designs payroll and workforce management software, has posted quarterly double-digit profit and sales gains for at least the past four years. Analysts expect that streak to continue the next two quarters. The stock is shaping a handle with a 209.81 entry. Cadence Design Software ( CDNS ) is holding just above a 23.40 buy point first cleared in late March. It’s finding support at its 50-day line. The stock has the top Composite Rating, 95, in the design software group.

Ultimate Software Gains Momentum, Beats Street, Raises Forecast

Shares of enterprise software maker  Ultimate Software Group ( ULTI ) jumped 6% in morning trade before settling back, following Tuesday’s impressive first-quarter report, which beat Wall Street’s top and bottom lines. Ultimate, which specializes in HCM SaaS — human capital management software as a service — reported first-quarter EPS up 40% to 73 cents minus items, eight cents beyond consensus, on sales up 29% to $187 million, where Wall Street expected $180 million. With 2016 gaining momentum, Ultimate also raised its full-year forecast to 26% sales growth from 25% “and now claims 99% visibility into this goal,” noted Evercore ISI analyst Kirk Materne. Materne raised his price target to 200 from 195 “based on the continued acceleration in the business, especially in the midmarket,” he said in a Wednesday research note, reiterating a hold rating. “All in all, we believe the company remains on track to hit its $1 billion revenue target in 2018; and with the company’s current (2016) guidance implying (an approximately) 275 basis-point decline in recurring revenue growth in (the second half vs. the first half), we expect that estimates could potentially have room to move higher over the course of the year.” More bullishly, FBR analyst Samad Samana said in a Wednesday research note, Ultimate ultimately “can deliver accelerating revenue growth and margin expansion in 2016.” Samana raised FBR’s price target on Ultimate to 220 from 205 while maintaining an outperform rating. Climbing the right side of a 25-week cup base, Ultimate stock jumped 6% to 209.71 in morning trade before settling back to a 0.5% gain near 198 in the stock market today , 8% off a 216.27 record high set Nov. 9. Ultimate’s enterprise rivals and peers were mixed Wednesday, with Salesforce.com ( CRM ) down 1.5% to 75.05, while SAP ( SAP ) was up 1.2% to 80.43, less than 1% from recent highs. Legacy software developer Oracle ( ORCL ) was down fractionally. Microsoft ( MSFT ) was off 1%. One stock in IBD’s Computer Software-Enterprise industry group, that of cloud advertising software developer Rubicon Project ( RUBI ), enjoys a slightly better IBD Composite Rating than Ultimate: Rubicon’s best-possible 99 vs. Ultimate’s 98. Salesforce carries a 93 CR and SAP 72. Outside the group, Oracle is rated 60 and Microsoft 43. Ultimate’s 40% EPS growth rate was the best in eight quarters, but its 29% sales pace was the best in at least 19 periods. For the second quarter, Ultimate guided its adjusted operating margin to 20% and total sales to $187 million. Analysts polled by Thomson Reuters are expecting earnings of 77 cents per share minus items on revenue of $185 million. A year ago in Q2, Ultimate earned an adjusted 62 cents per share on sales of $147 million. Needham analyst Scott Berg said he was “impressed” that Ultimate reported consecutive quarterly deferred revenue growth exceeding 30% in the first quarter and year-to-year deferred revenue up 34.5%, its best in at least six years. He reiterated a buy rating with a 220 price target.

Will Salesforce.com Help End Enterprise Software’s ‘Beatdown’?

More than most, Salesforce.com’s fourth-quarter earnings — scheduled for release after the market close Wednesday — could help bring an end to what one analyst calls “the beatdown that growth software stocks endured for about 45 days.” “We believe that last week probably marked a bottom, or close to a bottom” for software companies that “are down about 25% for the average stock,” wrote Canaccord Genuity analyst Richard Davis in a research note Sunday. “Deals are getting a bit more scrutiny than before, but we believe we are nowhere near anything that looks like an IT spending clampdown. We are broadly optimistic on the outlook for next-generation software companies.” Salesforce ( CRM ) stock hit a 16-month low at 52.60 on Feb. 8, then rose 22% through Monday’s close at 63.98. Salesforce stock was down a fraction, near 63.50, in afternoon trading in the stock market today . That’s 23% off the stock’s all-time high of 82.90, hit Nov. 19, after Salesforce reported fiscal-third-quarter earnings up 50%. Salesforce is a cloud software pioneer and the No. 1 maker of customer relationship management software. Salesforce is coming off many years of double-digit revenue growth and seven consecutive quarters of double- or triple-digit earnings-per-share gains, year over year. Its market cap at $42 billion makes it half the size of SAP ( SAP ), the largest in IBD’s Computer Software-Enterprise industry group, and much smaller than business software giant Oracle ( ORCL ), with its $154.7 billion market cap. But Salesforce is much larger than next-generation cloud software companies  Workday ( WDAY ), ServiceNow ( NOW ), Ultimate Software ( ULTI ) and others. Salesforce’s fiscal Q4 2016, which ended in January, should make it eight consecutive quarters of double-digit-or-better earnings growth. Analysts polled by Thomson Reuters expect Salesforce to report earnings up 36% to 19 cents per share minus items, on revenue up 24% to $1.79 billion. Salesforce had guided Q4 to adjusted EPS of 18 to 19 cents on sales up 24% at the midpoint. Earnings especially were a tough comparison to follow, as EPS had doubled to 14 cents in fiscal Q4 of 2015. For the current Q1 2017 ending in April, Wall Street models EPS up 31% to 21 cents ex items, on revenue up 23% to $1.861 billion. Salesforce CEO Marc Benioff said at the Q3 analyst conference: “We expect to deliver our first $8 billion year during our fiscal year 2017, which puts us well on the path to reach $10 billion faster than any other enterprise software company.” The company’s Salesforce1 platform for mobile-application development should spark growth, RBC Capital Markets analyst Ross MacMillan said in a research note Sunday, although “there are many avenues to sustain growth, including service and marketing, the platform, and international and future initiatives. “While deceleration is inevitable, we think Salesforce can continue to drive premium growth for its size, and it remains an important strategic asset.” RBC maintains an outperform rating on Salesforce.com stock, with an 80 price target, as “one of the best positioned companies in large-cap software.”