Atlassian (TEAM), Cloudflare (NET) and Microsoft (MSFT) were in the spotlight on Wednesday as investment firm Mizuho Securities cut its price targets on the technology firms.
Mizuho lowered its price target on Atlassian to $225 from $245, its target on Cloudflare to $255 from $280, and its target on Microsoft to $620 from $640. The firm kept its Outperform ratings on the trio.
“Our 4Q checks were solid overall,” analyst Gregg Moskowitz wrote in a note to clients. “Public cloud/consumption data points were generally good, and AI adoption remains very strong. Cybersecurity demand was fairly healthy, and SaaS was resilient. Having said that, some of our checks noted more moderate budget flush activity than usual. Also, growing investor concerns about AI-led disruption continue to decimate many software company multiples, and particularly those within SaaS.”
Moskowitz continued: “From a valuation standpoint, NTM EV/Sales multiples are currently 55% below five-year peak levels, and 30% below average levels. We currently find the risk/reward quite attractive over the NTM, but a higher level of unpredictability may create some unusual challenges and a particularly rocky path. With all that said, our favorite December-ending stocks to own ahead of the print are TEAM and MSFT.”
