SAP AG (SAP), Adobe Systems (ADBE), Citrix Systems (CTXS) are rated “outperform” by Mark Moerdler, Senior Research Analyst at Sanford C. Bernstein & Co., LLC. These companies are seeing opportunities for recurring revenue, and Moerdler says aspects in mobile and database lift these companies in different ways.
“The opportunity for SAP is threefold because the core business is reasonably protected. It’s got a very large recurring revenue stream to it, and in addition, they’ve moved into the area and they developed organically a technology in memory database called HANA, which we believe will generate significant revenue in the business intelligence space. They have also moved into the cloud by acquisition and some of their own development to be able to offer what’s now becoming a suite of cloud-based ERP solutions,” Moerdler said.
For Adobe, Moerdler says the investment community has stopped watching, and during that time ADBE has increased the percentage of their business that is recurring revenue, moved into CRM/digital market by acquiring Omniture, and they have taken the Creative Suite product and are now offering it as a license and subscription version, with upside from its mobile device app-development capabilities.
Moerdler then says the “outperform” rating on Citrix is driven by “mobile and that we see there’s an opportunity here for Citrix to grow their desktop virtualization business. As consumers buy more and more mobile devices, they come to work with them, they want access to the corporate apps from it and one of the best ways to deliver it is desktop virtualization, application virtualization, which is core to Citrix’s business.”