Microsoft Overweight as KeyBanc initiates coverage on swath of software companies

Microsoft (NASDAQ:MSFT) received an Overweight rating due to its multiple methods to monetize artificial intelligence as KeyBanc initiated coverage on an array of enterprise software companies.

KeyBanc analyzed trends such as AI monetization and cloud efficiency in its ratings. Overall, the firm expects 2024 to be a strong year for the enterprise software sector.

In an exhaustive report, KeyBanc Capital Markets assigned Overweight ratings to the following companies:

• ServiceNow (NOW) for monetizing AI and holding additional "growth drivers outside of that mega-trend"
• SAP (SAP) due its cloud transition and free cash flow generation
• Oracle (ORCL) can sustain growth on cloud application migration
• ZoomInfo (ZI) holds a strong margin profile and is discounted versus its peers
• Monday.com (MNDY) for efficient growth on a pricing tailwind
• Sprout (SPT) holds a leading position in social media management
• Sprinkler (CXM) another leader in social media management that has broadened its products
• Semrush (SEMR) for "accelerating growth with serious margin expansion and trading at a big discount"

KeyBanc assigned Underweight ratings to the following:

• Adobe (ADBE) as the company is failing to grow at the same rate it used to
• Asana (ASAN) for lower than expected returns on investment
• Hubspot (HUBS) faces the "potential for go-to-market disruption in both the direct and indirect channels"

The following companies received Sector Weight ratings:

• Salesforce.com (CRM) as its "efficiency gains will be harder to repeat"
• WalkMe (WKME) due to its growth not matching expectations
• Smartsheet (SMAR) has strong margin expansion
• Amplitude (AMPL) as "you have to bank on multiple expansion to get outsized returns in the near term"
• Klaviyo (KVYO) remains a leader in the email marketing category