Friday 12th March, 2021
Goldman Sachs has added three software stocks to the firm’s Conviction Buy list: Salesforce, Microsoft, and Coupa.
Goldman Sachs Managing Director, Kash Rangan, says Microsoft and Salesforce are “well positioned to capitalize on digital transformation spending, which we believe will outpace overall IT budgets for the foreseeable future.
“Similarly, we see Coupa continuing to benefit from the increasing pace of digital transformation in the office of the CFO. Also, we see it as an accelerating growth story in 2021, which sets up well for a steady cadence of positive revenue revisions, and therefore a re-rating of the multiple as well.”
Rangan adds that Coupa offers “a large addressable market, high barriers to entry and long-term sustainable growth.”
On Microsoft, Rangan says that the company can take advantage of multiple secular trends, including public cloud, software-as-a-service, digital transformation, artificial intelligence and machine learning, and business intelligence and analytics.
“We see a pathway for sustained double-digit topline growth alongside continued margin expansion,” he writes. “Moreover, our conversations point to Microsoft Azure increasingly short-listed as a strategic cloud vendor within large enterprise customers where we believe Microsoft is well positioned to continue to take market share."