Analysts at KeyBanc Capital Markets started coverage of several enterprise and front-office software stocks in a note to clients Thursday.
The firm started Microsoft (NASDAQ:MSFT), ServiceNow (NYSE:NOW), SAP SE (SAP), Oracle (NYSE:ORCL), ZoomInfo Technologies Inc. (ZI), monday.com Ltd. (MNDY (NASDAQ:MNDY)), Sprout Social (NASDAQ:SPT), Sprinklr (CXM), and Semrush (SEMR) at Overweight.
According to KeyBanc, ServiceNow is putting actual AI revenue on the board with a "multiplicity of potential growth drivers outside of that mega-trend."
Meanwhile, the firm feels SAP is entering the later stages of a cloud transition with a focus on cleaner free cash flow generation, while they believe that for Oracle, "AI makes room for OCI."
Furthermore, the firm noted Semrush's accelerating growth, saying it has "serious margin expansion" and is trading at a big discount, making it "almost too obvious."
Overall, based on their ratings distribution, the firm said it appears they like large-cap and early AI leaders and see smaller caps as a bit out of favor.
Adobe Systems (NASDAQ:ADBE), Asana, Inc. (ASAN), and HubSpot (NYSE:HUBS) were initiated with Underweight ratings, while Salesforce (NYSE:CRM), WalkMe Ltd. (WKME), Smartsheet (NYSE:SMAR), Amplitude, Inc. (AMPL), and Klaviyo (NYSE:KVYO) were started at Sector Weight.