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MSFT

Microsoft

$62.30

-0.28 (-0.45%)

, ADBE

Adobe

$104.14

0.66 (0.64%)

10:38
01/05/17
01/05
10:38
01/05/17
10:38

Microsoft, Salesforce, Twilio called out as top cloud picks

Research firm Pacific Crest named its favorite cloud stocks for 2017, listing Microsoft (MSFT), Adobe (ADBE), Salesforce (CRM) and Twilio (TWLO) as among the firm's top picks in the space. In conjunction with the note, the firm upgraded Twilio to Overweight from Sector Weight. CLOUD OUTLOOK: Pacific Crest analyst Brent Bracelin remains upbeat on cloud application pure plays, citing his belief that public cloud spending is poised to triple by 2020. Moreover, total spending on cloud applications, also known as software as a service, could increase by more than 20% annually, hitting $129B a year by 2020, Bracelin believes. BIGGEST NAMES: Microsoft is entering a new era of innovation, wrote Bracelin. Moreover, its growth should accelerate, driven by its new products and its momentum in cloud and gaming, the analyst stated. He raised his price target on the stock to $70 from $65. The momentum of Adobe's marketing cloud products should enable its growth to accelerate this year, Bracelin believes. Driven by subscription revenue gains of more than 80%, the company's operating margin could rise to more than 35%, he wrote. Finally, Salesforce has dropped to valuations that have proven to be good entry points in the past, and its margins can rise if the negative impact of companies it has acquired ease, Bracelin believes. The stock can reach $95 per share, he predicted. TWILIO UPGRADE: Bracelin upgraded Twilio to Overweight from Sector Weight. The company, which provides programmable cloud software, can beat the consensus 2017 revenue growth estimate, the analyst believes. According to Bracelin, Twilio's chances of becoming profitable by the end of this year have increased. Twilio's core business, which represents 90% of its total revenue, is growing quickly, wrote Bracelin, estimating that its top line will rise 43% this year, up from his previous estimate of 37%. Declaring that Twilio is an "instrumental" enabler of "some of the most prolific new cloud services," Bracelin said that the 55% decline in the stock this quarter has created an "attractive risk/reward ratio." He placed a $36 price target on the shares. WHAT'S NOTABLE: The firm's other top cloud stock picks for 2017 are Veeva (VEEV), Ellie Mae (ELLI) and HubSpot (HUBS). PRICE ACTION: In early trading, Microsoft was unchanged at $62.30, Adobe added 0.8% to $104.95, Salesforce gained 1% to $73.50, and Twilio advanced 1.8% to $28 per share.

MSFT

Microsoft

$62.30

-0.28 (-0.45%)

ADBE

Adobe

$104.14

0.66 (0.64%)

CRM

Salesforce

$73.41

0.61 (0.84%)

TWLO

Twilio

$28.02

0.505 (1.84%)

VEEV

Veeva

$41.68

-0.0873 (-0.21%)

ELLI

Ellie Mae

$84.77

-1.435 (-1.66%)

HUBS

HubSpot

$50.25

0.55 (1.11%)

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MSFT Microsoft
$62.30

-0.28 (-0.45%)

12/22/16
12/22/16
INITIATION

On The Fly: Top five analyst initiations
Catch up on today's top five analyst initiations with this list compiled by The Fly: 1. Microsoft (MSFT) initiated with an Overweight at Piper Jaffray. 2. Sarepta (SRPT) initiated with an Overweight at JPMorgan. 3. Oracle (ORCL) initiated with an Overweight at MUFG. 4. Zillow (Z, ZG) initiated with a Hold at Stifel. 5. Las Vegas Sands (LVS) was initiated with a Buy and Wynn Resorts (WYNN) was initiated with a Neutral at Aegis. This list is just a portion of The Fly's analyst coverage. To see The Fly's full Street Research coverage, click here.
12/22/16
MSCO
12/22/16
NO CHANGE
MSCO
Microsoft has multiple EPS catalysts including LinkedIn, says Morgan Stanley
Morgan Stanley analyst Keith Weiss says that "top line acceleration, gross margin stabilization, op margin expansion, and aggressive share repurchases" will boost Micrsoft's EPS growth, and he conservatively estimates that LinkedIn will raise the company's EPS by another 2% in fiscal 2019. The analyst expects the gross margins from the company's cloud business to rise, and he predicts that the stock's multiple will rise to 20 times from 18 times as its cloud business expands. Weiss predicts that the stock will return a total of about 15% through fiscal 2019 and he raised his price target on the shares to $72 from $64 while keeping an Overweight rating.
12/22/16
BOFA
12/22/16
NO CHANGE
BOFA
BofA/Merrill's 2017 top Software picks
BofA/Merrill analyst Kash Rangan named his 2017 top picks in the Software sector they are Large caps Salesforce (CRM), Microsoft (MSFT), and Intuit (INTU) ; SMid caps ServiceNow (NOW) and HubSpot (HUBS); and expects underperformance from Autodesk (ADSK) and Symantec (SYMC).
01/05/17
01/05/17
NO CHANGE

Pacific Crest names top cloud stocks for 2017
Pacific Crest analyst Brent Bracelin remains upbeat on cloud application pure plays, citing his belief that public cloud spending is poised to triple by 2020. He identifies the following cloud application software stocks as having the best risk/reward ratio and the best chances of success: Microsoft (MSFT), Adobe (ADBE), Salesforce (CRM), Veeva (VEEV), Ellie Mae (ELLI), Twilio (TWLO), and HubSpot (HUBS).
ADBE Adobe
$104.14

0.66 (0.64%)

01/04/17
BMOC
01/04/17
INITIATION
Target $125
BMOC
Outperform
Adobe initiated with an Outperform at BMO Capital
BMO Capital initiated Adobe with an Outperform and a $125 price target.
01/05/17
BMOC
01/05/17
INITIATION
BMOC
Outperform
Adobe initiated at BMO Capital
As noted earlier, BMO Capital started coverage of Adobe with an Outperform rating and a $125 price target. Analyst Keith Bachman says that the company's EPS can beat expectations, driven by "the growth of Creative Cloud, Marketing Cloud margin expansion and operating expense leverage."
01/05/17
01/05/17
INITIATION

On The Fly: Top five analyst initiations
Catch up on today's top five analyst initiations with this list compiled by The Fly: 1. Adobe (ADBE) was initiated with an Outperform and FireEye (FEYE) was initiated with a Market Perform at BMO Capital. 2. Hilton (HLT) initiated with a Buy at Goldman and a Sell at Berenberg. 3. Hershey (HSY) initiated with a Sell at Berenberg. 4. PayPal (PYPL) initiated with a Buy at Guggenheim. 5. Mondelez (MDLZ) initiated with a Buy at Berenberg. This list is just a portion of The Fly's analyst coverage. To see The Fly's full Street Research coverage, click here.
CRM Salesforce
$73.41

0.61 (0.84%)

01/04/17
ADAM
01/04/17
NO CHANGE
Target $95
ADAM
Buy
Canaccord does not believe Salesforce will pursue large M&A
Canaccord analyst Richard Davis believes investors are concerned Salesforce has come unglued in search of large M&A deals. He sees no $4B targets that make sense and rather sees more small tuck-in acquisitions, leaving the odds of a large deal rather low. Davis continues to recommend the shares at current levels and calls Salesforce one of his top large-cap picks. He reiterated his Buy rating and $95 price target on Salesforce shares.
01/04/17
PIPR
01/04/17
NO CHANGE
PIPR
Piper lays out top Technology picks for 2017
Piper Jaffray analyst Troy Jensen laid out his top Technology picks for 2017. He highlights stocks within the Security, Optical and Enterprise Software sectors as top picks. Jensen's top large-cap picks in Security are Symantec (SYMC) and Palo Alto Networks (PANW). His top small-cap Security pick is Proofpoint (PFPT). In Optics, the analyst's top picks are Ciena (CIEN), Finisar (FNSR) and Lumentum (LITE). In Enterprise, Jensen likes Salesforce (CRM), Ultimate Software (ULTI) and HubSpot (HUBS).
TWLO Twilio
$28.02

0.505 (1.84%)

12/19/16
DRXL
12/19/16
INITIATION
Target $45
DRXL
Buy
Twilio initiated with a Buy at Drexel Hamilton
Target $45.
01/05/17
01/05/17
UPGRADE

Overweight
Twilio upgraded to Overweight from Sector Weight at Pacific Crest
Pacific Crest analyst Brent Bracelin upgraded Twilio to Overweight saying he sees an upward bias to 2017 consensus estimates and an increasing probability that the company reaches profitability by year-end. Investors are underappreciating the growth potential in Twilio's usage-based model, Bracelin wrote earlier today in a research note. He views the stock's risk/reward as attractive and set a $36 price target for the name. Twilio in early trading is up 83c, or 3%, to $28.34.
12/20/16
DRXL
12/20/16
INITIATION
Target $45
DRXL
Buy
Twilio initiated with a Buy, $45 price target at Drexel Hamilton
Drexel Hamilton analyst Brian White initiated Twilio with a Buy and a $45 price target saying it is recognized as a pioneer in the rapidly growing cloud communications platform market. He believes Twilio provides investors with a disruptive, next-generation cloud play that we estimate will deliver the fastest sales growth of any company in our coverage universe in 2016.
VEEV Veeva
$41.68

-0.0873 (-0.21%)

12/16/16
JMPS
12/16/16
UPGRADE
JMPS
Outperform
Veeva upgraded to Outperform from Market Perform at JMP Securities
12/16/16
JMPS
12/16/16
UPGRADE
JMPS
Outperform
Veeva upgraded on positive catalysts at JMP Securities
As noted earlier, JMP Securities upgraded Veeva to Outperform from Market Perform. Analyst Rishi Jaluria says that investors are underestimating the company's content management solution, while the company faces a limited competitive threat and has attractive opportunities outside of life sciences and CRM Engage that are not reflected in the stock. Target $51.
12/16/16
12/16/16
NO CHANGE

Veeva 'appears to be firing on all cylinders,' says Pacific Crest
After meeting with Veeva's CFO, Pacific Crest analyst Brent Bracelin is more confident that the company's new products have left it poised for "a stellar 2017." He thinks the company appears to be firing on all cylinders and says that the company has better prospects than the other 12 software companies with whom he met.
ELLI Ellie Mae
$84.77

-1.435 (-1.66%)

01/05/17
01/05/17
NO CHANGE

Ellie Mae should be bought on bad news, says Pacific Crest
Pacific Crest recommends buying Elli Mae on weakness caused by interest rate hikes. The firm is upbeat about the company's next generation platform due out next year, but it cut its price target on the shares to $107 from $128.
12/05/16
12/05/16
NO CHANGE

Ellie Mae risk/reward 'compelling,' says Pacific Crest
Pacific Crest analyst Brent Bracelin notes that Elli Mae's stock has tumbled 27% in the last month. He blames the decline on fears of rising interest rates and a sharp decline in mortgage refinancing. Calling the stock "one of the highest-margin (software as a service) pure-plays growing north of 20%," the analyst thinks that the stock can reach $128 in a year. He keeps an Overweight rating on the shares.
12/12/16
JPMS
12/12/16
NO CHANGE
Target $118
JPMS
Overweight
JPMorgan says market too negative on Ellie Mae
Ellie Mae shares since the U.S. election have been under pressure over concerns about rising interest rates and lower regulations and what it means for the non-contracted part of the business, JPMorgan analyst Sterling Auty tells investors in a research note. The market "has gone too far" and is not factoring in what a better macro outlook would mean for new home purchases that make up 60% of Ellie's business, Auty tells investors in a research note. He keeps an Overweight rating on the stock with a $118 price target.
HUBS HubSpot
$50.25

0.55 (1.11%)

12/19/16
NEED
12/19/16
NO CHANGE
Target $65
NEED
Buy
HubSpot 'well positioned' to outperform 2017 estimates, says Needham
Needham analyst Scott Berg believes HubSpot's end market demand, execution, and operating model showed continued strength in 2016 and is "well positioned" to outperform current 2017 estimates. The analyst says HubSpot can at a minimum maintain its current valuation multiple but likely expand valuation with 2017 consensus revenues, billings, and profitability that seem "highly conservative." He reiterates a Buy rating and $65 price target on the shares.

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