Adobe, Snowflake, others in focus as Piper Sandler weighs in on enterprise software

Research firm Piper Sandler weighed in on a basket of enterprise software stocks on Friday, noting that it has concerns about the weakening macro background and how it could impact lower growth rates for the sector.

“We are proactively lowering growth estimates and PTs across our coverage list to better reflect rising macro risk factors and elevated budget battles that could further pressure net new purchases and seat expansions into the 2H,” analysts at the firm wrote in a note to clients, adding that slowing demand that surfaced at companies like Salesforce (CRM), Workday (WDAY), Veeva Systems (VEEV) and MongoDB (MDB) has spread.

“…[Third-party] data inputs that have remained sluggish since March, and anecdotal comments of ‘cost take-out’ actions that we’re hearing in the field make us more cautious at mid-year,” the analysts added.

As a result, the firm cut its price targets on several enterprise software stocks. Adobe (NASDAQ:ADBE) was moved to $635 from $700, while HubSpot (HUBS) was lowered to $570 from $655. MongoDB was cut to $300 from $350, Snowflake was lowered to $165 from $240, while Asana (ASAN) was cut to $14 from $16.

Piper Sandler also lowered their targets on Freshworks (FRSH) and Klaviyo (KVYO) to $17 and $30, down from $22 and $38, respectively.

Despite the concerns about the broader global economy, Piper Sandler analysts noted there are still “pockets of strength,” especially related to artificial intelligence.

“Accelerating [infrastructure-as-a-service] spend on AI tailwinds should benefit MSFT and ORCL,” the analysts wrote. “Healthy demand for workflow builder tools and new pricing has sustained strong momentum at MNDY. The end of ECC support deadline by SAP (not covered) has created a greater sense of urgency for accounting modernization.”

As such, Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL) and monday.com (MNDY) are the firm’s “highest conviction ideas” in enterprise software.