Apps & Software
Citigroup Ponders 7 Top Software Stocks to Buy in This Correction
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Technology stocks have taken a beating since the beginning of the year, and the Nasdaq has firmly entered correction territory. The other major averages have been pulled lower as well, but the Nasdaq has gotten the worst of it, with its heavy weighting in tech stocks.
As it stands now, most tech companies are waiting out what could be a year of rising interest rates, at the behest of the Federal Reserve, and downside risk is a tough call at this point in the cycle. Analysts are making their pitches for the bulls and bears, but it is yet to be seen how this will play out. The question is if these stocks are in a deep value position or they could stand to sink lower, or even worse.
24/7 Wall St. is taking a closer look at a report from Citigroup and the seven software and cybersecurity companies it is targeting in the coming year. Although these particular companies do not make up a significant portion of the sector (like the big names of Alphabet, Apple or Microsoft), investors still could still see significant gains in playing these stocks.
Akamai Technologies
The first stock on Citigroup’s list is Akamai Technologies Inc. (NASDAQ: AKAM). The investment house initiated coverage with a Buy rating, noting that Akamai is an early pioneer of powering a fast, safe and reliable public internet for all users. The company has extended beyond its content delivery roots to capture an outsized share of intellectual property traffic, while deepening its bench in the web-facing infrastructure protection arena.
The stock last closed at $112.56, and it has a 52-week range of $92.64 to $124.91. Akamai Technologies stock is down around 4% year to date.
Check Point Software
On Check Point Software Technologies Ltd. (NASDAQ: CHKP), Citigroup initiated coverage with a Sell rating, citing that topline growth trends have been hampered in the single-digit range. Also, it does not help that growth at competitors Palo Alto Networks and Fortinet is tracking far better than at Check Point.
The shares recently closed at $119.21, in a 52-week range of $107.85 to $137.49. Check Point Software Technologies stock is down 2% year to date.
Citrix Systems
Citigroup started coverage of Citrix Systems Inc. (NASDAQ: CTXS) with a Sell rating. The investment bank said that, amid a drawn-out and questionably-accretive license-to-SaaS model transition, executive transitions and increasing competition, the challenges for Citrix appear to be structural. Hence, the negative rating for the stock.
Citrix Systems stock closed most recently at $101.38, and it has a 52-week trading range of $78.07 to $145.19. The share price is actually up 7% year to date.
24/7 Wall St.CrowdStrike
Coverage of CrowdStrike Holdings Inc. (NASDAQ: CRWD) was started with a Buy rating. Citigroup noted that the disaggregation of the corporate network and cyberattack surface, cloud adoption and connected device growth puts CrowdStrike in a leading position to gain more revenues. This occurs as the firm’s model shifts from tactical (protect and prevent) to strategic (detect and respond).
CrowdStrike stock has a 52-week range of $150.02 to $298.48, and it most recently closed at $158.59. Shares are down 22% year to date.
Palo Alto Networks
Citigroup initiated coverage of Palo Alto Networks Inc. (NASDAQ: PANW) with a Buy rating. The firm said that mixed growth and execution trends, leadership transitions and margin contraction have contributed to Palo Alto’s mixed returns and relative underperformance over the past three years.
The stock last closed at $475.47, and it has a 52-week trading range of $311.56 to $572.67. Palo Alto Networks stock is down nearly 15% year to date.
SailPoint Technologies
SailPoint Technologies Holdings Inc. (NYSE: SAIL) was initiated with a Sell rating as a result of slowing customer growth, a chief financial officer role still in transition and limited visibility into the rate and magnitude of margin. Citigroup takes an overall cautious view of the stock.
Shares recently closed at $36.65, and they have a 52-week trading range of $36.45 to $64.19. SailPoint Technologies stock is down 24% year to date.
24/7 Wall St.Zscaler
Coverage of Zscaler Inc. (NASDAQ: ZS) was started with a Buy rating. Citigroup was quick to note that this is the most expensive stock in the cybersecurity universe, on a relative and growth-adjusted basis. The company has seen seven straight quarters of growth acceleration, along with a lower “Microsoft threat” discount relative to cloud native security peers, which has earned the company a deserved premium according to Citigroup.
Zscaler stock has a 52-week range of $157.03 to $376.11, and it most recently closed at $228.88. Shares are down nearly 29% year to date.
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