Market Overview

UBS Getting More Positive On Software: ServiceNow, Splunk, MINDBODY


UBS analysts led by Brent Thill shared their key takeaways from the second day of their four-day UBS Software Bus Tour, in which they met with six public and private software companies, including ServiceNow Inc (NYSE: NOW), Splunk Inc (NASDAQ: SPLK), MINDBODY Inc (NASDAQ: MB) and Autodesk, Inc. (NASDAQ: ADSK).

The experts left the meetings with four main themes.

  • 1) The talent hiring market is becoming more of a buyers' market, as the private market cools off.
  • 2), Inc. (NASDAQ: AMZN)’s AWS still is “the runaway favourite among public cloud vendors,” although Microsoft Corporation (NASDAQ: MSFT)’s Azure also gets some interest.
  • 3) “'SaaS rules' with the increased commitment to cloud only further accelerating acceptance”
  • 4) All of the vendors visited said overall demand trends were positive, while they did not point out macro as an issue.

From a company-specific standpoint, UBS’ analysts left feeling most positive on ServiceNow, Splunk and MINDBODY, due to an increased size of the opportunity($60 billion TAM), a sustained ramp in partner activity, and robustness of the overall pipeline, which includes a “step- function-like increase in large deal sizes” to $5-$10 million.

UBS has Buy ratings for ServiceNow, Splunk and MINDBODY, and a Neutral rating for Autodesk.

Latest Ratings for NOW

Nov 2020KeyBancInitiates Coverage OnOverweight
Nov 2020Morgan StanleyUpgradesEqual-WeightOverweight
Oct 2020BMO CapitalMaintainsOutperform

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