Goldman Sachs analyst Kash Rangan initiated coverage on a basket of software names late Thursday, assigning buy ratings to shares of Microsoft Corp. MSFT, +1.97%, Workday Inc. WDAY, +1.32%, Adobe Systems Inc. ADBE, +0.49%, ServiceNow Inc. NOW, +1.54%, Salesforce.com Inc. CRM, +2.05%, and Splunk Inc. SPLK, +1.16%. He’s less upbeat about the prospects for Autodesk Inc. ADSK, -0.35% and Oracle Corp. ORCL, -1.21% as he assigned sell ratings to both names. Rangan’s buy-rated stocks “lean more toward reasonably valued high quality growth franchises,” he wrote. Companies like Microsoft, Salesforce, Workday, and Splunk look poised to benefit from a potential shift in software spending priorities toward the second half of the year, he argued. While corporate IT departments have been spending on “defensive” categories like video conferencing and remote applications, they could soon shift to more “offensive” areas like the public cloud, human-capital management, and financial tools, Rangan wrote. As for the sell-rated names, Rangan is worried about “secular pressure” for Oracle’s middleware business and the health of Autodesk’s customer base, particularly in terms of commercial construction companies after the pandemic ends.
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