2023-05-11 09:11:29 ET
Twilio ( NYSE: TWLO ), Bentley Systems ( NASDAQ: BSY ), RingCentral ( NYSE: RNG ) and TechTarget ( NASDAQ: TTGT ) fell approximately 2% or more in pre-market trading on Thursday as Goldman Sachs downgraded the quartet of software companies, citing a "limited catalyst path" for the stocks after they reported first-quarter results.
Analyst Kash Rangan lowered his ratings on Twilio ( TWLO ), Bentley Systems ( BSY ) and RingCentral ( RNG ) to neutral from buy and cut TechTarget ( TTGT ) to sell from neutral.
Twilio: For Twilio ( TWLO ), Rangan said the firm is "cautious" on the near-term trajectory of revenue growth due to its usage-based model and slowing growth in Data and Applications after it showed a slowdown in the first quarter.
Bentley Systems: For Bentley Systems ( BSY ), Rangan said the downgrade stemmed from a "limited catalyst path for the shares amid China volatility and potential for more pronounced Commercial sector weakness, coupled with a demanding valuation."
On Tuesday, Bentley ( BSY ) reported first-quarter results that topped expectations.
RingCentral: Rangan downgraded RingCentral ( RNG ) due to the fact the firm is "becoming incrementally more cautious" on how durable its double-digit revenue growth can be in the face of continued competition from Microsoft ( MSFT ) and Zoom ( ZM ).
RingCentral ( RNG ) reported first-quarter results that topped estimates on Tuesday, in addition to raising its fiscal 2023 guidance.
TechTarget: TechTarget ( TTGT ) was downgraded by Rangan on worries that there will be "continued pressure in enterprise IT to weigh on the top-line." Additionally, since the company has non-subscription based revenue, it has more limited visibility than other software companies.
Analysts are largely bullish on Twilio ( TWLO ). It has a BUY rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates TWLO a HOLD .
More on Twilio and software stocks
- Morgan Stanley's Wilson screens for stocks as earnings stabilize but data disappoints
- Twilio's IoT business unit to be acquired by KORE to build first 'IoT Hyperscaler'
- Intuit, ZoomInfo, Twilio may see impact from SVB fallout, but likely 'transient': analyst
For further details see:
Goldman Sachs downgrades Twilio, other software names on 'limited catalyst' path