2023-07-14 09:26:42 ET
Ahead of the start of second-quarter earnings season, investment firm Barclays previewed investor sentiment on several software stocks, noting it is "cautious" on Twilio ( NYSE: TWLO ) and more constructive on Hubspot ( NYSE: HUBS ).
Analyst Ryan MacWilliams - who has an equal-weight rating on Zoom Video Communications ( NASDAQ: ZM ), Atlassian ( NASDAQ: TEAM ), Twilio ( TWLO ) and Hubspot ( HUBS ) and an overweight rating on Five9 ( FIVN ) - said the group is seeing mixed sentiment, with some viewed more favorably than others.
For Atlassian ( TEAM ), MacWilliams said there is a "debate" as server end-of-life is driving uncertainty for fiscal 2024.
"We think shares could be lower if TEAM guides Cloud rev. on a quarterly basis (given migration unpredictability) even with a FY24 total rev. growth guide of ~20% (in-line with Street)," MacWilliams wrote, adding the caveat that earnings could serve as a "clearing event" for investors.
For Twilio ( TWLO ), MacWilliams said it could be a better buy into the results, but the firm is "cautious" on company-specific headwinds. Comparisons for the third-quarter from 2022 present an easier guide, MacWilliams added.
Five9 ( FIVN ) is seen as "well positioned" as contact-center-as-a-service checks continue to be positive and the pipeline for large enterprise deals is "robust."
Zoom ( ZM ) is starting to look more attractive to Barclays, though MacWilliams conceded that investors are having a hard time getting positive on the stock.
"We think a possible ZM catalyst could be the reinstatement of its buyback, and we think enterprise sales efficiency could improve under new leadership," MacWilliams wrote.
Hubspot ( HUBS ) continues to see "strong" sentiment, as the recent NFIB Small Business Optimism Index showed an uptick in the health and optimism for small and medium-sized businesses, a positive read-through for Hubspot, the analyst said.
More on enterprise software
- Twilio: Driving Digital Customer Engagement On A Global Scale
- HubSpot: High Valuation With A Few Minor Cracks Showing
- Atlassian: Growth Stalling And Profitability Under Pressure
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Barclays 'cautious' on Twilio, more positive on Hubspot, others ahead of Q2 results