PLAN - Recent software volatility offers opportunities amid new normal growth - Wells Fargo
A pullback in software stocks may have been inevitable, Wells Fargo says in a new note, but even so the pace of the decline is notable. The high-growth/high-multiple crowd took the brunt of the decline recently, analyst Michael Turrin writes. The coverage group is 25% off its prior highs, slipping about 20% in just the past three weeks. The firm mentions key examples: DocuSign (DOCU), ZoomInfo (ZI), RingCentral (RNG) and Anaplan (PLAN) are all about 30% lower from peaks. And only one name in its overall coverage is up year-to-date: HubSpot (HUBS). And some degree of volatility was expected, Turrin writes, "but the pace of this unwind is also notable," with EV/sales multiples contracting almost 30% from Feb. 9 - to 26x from 35x, as rates moved in the opposite direction. Amid that volatility, Turrin and team are focused on fundamentals that still "reign supreme" and suggest valuation levels deserve a
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Recent software volatility offers opportunities amid new normal growth - Wells Fargo