- Needham analyst Scott Berg acknowledged that June-quarter earnings would conclude this week while July-quarter earnings fire up with five companies reporting, namely, Absolute Software Corp ABST, Paycor HCM, Inc PYCR, Salesforce, Inc CRM, Workday, Inc WDAY, and Zuora, Inc ZUO.
- He saw that 2QF22 earnings had a robust positive bend to them; however, last week's IGV (-3.9%) underperformed both the NASDAQ (-2,6%) and the S&P 500 (-1.2%) as new interest rates drove investors away from his growth-orientated space.
- This week, he was most positive on ABST (reiterated Buy; Price Target $14), PYCR (maintained Buy; Price Target $42), and ZUO (reaffirmed Buy; Price Target $24).
- For ABST, he believes educational sales had a solid seasonal rebound, while his industry checks suggest the company's Enterprise and Government segment continues to execute well.
- For PYCR, SaaS payroll companies have reported strong CY2Q 2022 results so far, and his industry work suggests PYCR had a similar demand benefit.
- For ZUO, he believes the current valuation of 3x ARR is too low given the 20%+ ARR growth opportunity he foresees for the next few years, driven by improving sales productivity.
- While the company has not made any acquisitions with the capital from Silver Lake, he does not expect any transformative deals but rather technology-focused tuck-in deals that are incremental to the product portfolio.
- Price Action: ABST shares traded lower by 0.88% at $10.15 on the last check Monday.
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