Wedbush Offers Top Software Picks: Tableau, PTC, Qlik

In a report issued Tuesday, Wedbush analysts Steve Koenig and Jae Cho revealed their top software picks for the second half of the year. Their selections, all Outperform rated, are: Tableau Software Inc (NYSE: DATA) in the growth sector, PTC Inc (NASDAQ: PTC) in growth at a reasonable price (GARP) and value, and Qlik Technologies Inc (NASDAQ: QLIK) in GARP.

Bird’s Eye View

Pretty much in line with the wider market, software stocks have been mixed since the start of 2015. Wedbush’s checks suggest demand conditions remain strong, and the analysts expect the second half of the year will see enterprise software companies in the spotlight, “with near-term catalysts and strong fundamentals, especially given increasing seasonality across the software space.”

The analysts said they think “investors waiting for the summer doldrums may miss the best opportunities to reposition their portfolios for the 2H,” and thus present their top picks for the period.

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Tableau Software

The firm set a $125 price target for Tableau Software. The see several factors driving momentum, including: (1) the company’s “superiority in self-serve, visual analytics; (2) its “marketing and sales execution capability, which is driving adoption of its visualization technology; (3) continuing build-out of DATA’s international operations; and (4) sustained product innovation, most recently with Tableau 9.”

Qlik Technologies

For Qlik Technologies, the price target was fixed at $41.

The firm remains bullish on this stock, based on its “reasonable 4.8x forward twelve months EV/revenue multiple” and its “outlook for constant-currency license acceleration and out-performance on the top and bottom lines" (the analysts expect revenue of $610 million and earnings of $0.35 per share for FY15, versus consensus of $608 million and $0.34 per share).

In addition, the analysts say they “are hearing from partners about growing interest in Sense’s modern, web-based architecture and JavaScript APIs, mobile-first design points, and suitability for web and mobile application development.” This, combined with the QlikView product, make of Qlik an attractive acquisition target, should the company decide to put itself up for sale.

PTC Inc

PTC received a $44 price target. Wedbush remains positive on the back of the company’s commitment to widening margins and returning cash to stockholders via share repurchases.

“We think PTC’s foray into Internet of Things (IoT) is off to a good start and offers upside optionality, provided PTC can balance its strong cost discipline in its core business with investment in IoT while keeping its eye on execution. We also see upside optionality from pending moves to transition more aggressively to high-value recurring subscription revenue,” the analysts add.