Best Research Ideas

Software – 2018 Outlook: Still Room for Appreciation Despite Rich Valuations

— John DiFucci, Equity Research Analyst, Software

Jefferies believes the secular forces in software are the best seen in nearly two decades due to performance improvements and price declines of foundational computing technology over the past 10-15 years. Jefferies sees regulations such as GDPR supplementing positive security trends, especially for solutions that are not widely deployed, benefiting VRNS and SAIL. Jefferies also believes the set-up for M&A in 2018 will rebound from the decline in 2017, driven by increased repatriation of funds, the continuation of relatively low interest rates and lower taxes which increase the base value of recurring revenue. Jefferies top pick names in 2018 are ORCL, PANW, APTI and CRM, which was upgraded to Buy in February. FULL REPORT