Barclays Downgrades Tangoe; Likes CyberArk, Tableau, Qlik & Others

In a report published Friday, Barclays analyst Raimo Lenschow previewed the U.S. Software space, noting that valuations across the sector is near the high end of their historical range, which may cause some investors to become "increasingly wary" of continued share outperformance.

Lenschow commented that investors concern may not necessarily be justified as near-term fundamental data and ongoing fund inflows to the software sector (from semiconductors) support valuations "for the time being."

Here are some key highlights from Lenschow research note:

• The analyst "likes" SAP SE (ADR)M SAP heading into its earnings print as its underlying license performance "seems to be holding up" stronger than the market is expecting. In addition, early product momentum surrounding S/4 HANA is "healthy."
• The analyst is "constructive" on VMware, Inc. VMW as growth expectations are "reasonable" and the company could expand its margins at a faster rate than some investors expect. However, investor sentiment tilts towards the bearish side given "questions" on its long-term growth prospects.
• The analyst also "likes" Cyberark Software Ltd CYBR following the "significant" selloff since its secondary offering announcement in June. Lenschow also suggested that the company's "achievable" numbers in the coming quarter makes for an "interesting volatility trade."
• The analyst still sees "strong structural tailwinds" behind Hortonworks Inc HDP from the "rapidly increasing" adoption of Hadoop.
• The analyst is "somewhat cautious" on CA, Inc. CA as its bookings performance continues to be "challenged" due to a lack of organic improvement in the near term.
• Finally, the analyst downgraded Tangoe Inc TNGO to Underweight from Equal-Weight (with a price target lowered to $13 from a previous $14) as the Rivermine acquisition will "do little" to accelerate growth.