CONFERENCE CALL REPLAY | The 2018 Software Outlook--Long and Strong

    January 23, 2018 8:00 AM PDT / 11:00 AM EDT

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    We hosted a conference call to discuss our 2018 Software Outlook.   Much has changed since our launch in September and we discussed how our thoughts on the sector have shifted, and our top stock picks for 2018.  Some of the highlights are:

    1. Despite a 52% move in the group last year, we remain bullish on Software both for Q4 and 2018 given strong demand, good/improving fundamentals and valuation opportunities.

    2. Our favorite stocks for 2018 are Splunk and Red Hat where fundamentals are very good, valuation is attractive and there is still resistance from investors.  We still love CRM, ADBE and NOW.

    3. VMW remains our favorite neutral.   We are incrementally more positive on MSFT and incrementally more cautious on DATA and SYMC.

    4. Our secular views have changed modestly as we detail; among several shifts, we are more constructive on containerization and micro-segmentation, as well as IoT for 2018 and more cautious on security.  Hybrid cloud, the migration of complex workloads to the cloud, the expansion of analytics and several other themes remain in place from 2017.

    5. Multiple expansion YoY has not been as great as some would expect for a 52% move, while the margin story for individual stocks and the group has improved for CY18.

    6. Tax changes and the 606 accounting standard will have major implications for the sector.

    7. M&A began to pick up in Q4 and we think this should accelerate into 2018.

    But that is just the beginning…