Industry Surge and Market Dynamics
In the Zacks Computer-Software Industry, there has been a remarkable surge that has significantly contributed to the robust performance of the Nasdaq in the past year. Notably, the industry’s one-year return stands at an impressive +58%, surpassing both the S&P 500 and the Nasdaq by wide margins, with figures of +21% and +36% respectively. Such a resounding performance signifies a favorable climate for computer software stocks and hints at promising outlooks for certain key players in the industry. The prevailing prospects of mitigated inflation and reduced interest rates augur well for consumer spending on non-essential items like tech products, setting the stage for an intriguing trajectory among top-rated computer software stocks.
Blackbaud: A Beacon of Stability and Growth
Blackbaud, currently holding a Zacks Rank #1 (Strong Buy), offers a comprehensive suite of cloud-based and on-premise software solutions. The company’s steadfast commitment to providing leading software solutions for social causes, underpinned by technology and expertise, has propelled its stock by +35% over the past year. The company is projected to conclude fiscal 2023 with a whopping 43% spike in earnings to $3.86 per share, marking a substantial increase from $2.69 a share in 2022. The outlook for fiscal year 2024 is equally promising, with anticipated EPS growth of 17% and a projected 8% increase in total sales to $1.2 billion. Furthermore, Blackbaud has consistently surpassed earnings expectations for six consecutive quarters, instilling confidence in its financial trajectory. The company’s upcoming fourth quarter report, scheduled for February 12, holds the potential to further validate its stellar performance.
Microsoft: A Long-Term Trailblazer
Microsoft, an industry stalwart, currently holds a Zacks Rank #2 (Buy) and has garnered an “A” Zacks Style Scores grade for Growth. The company’s shares have soared by +64% in the past year, outpacing the robust performance of the Zacks Computer-Software Industry. Over the last five years, Microsoft’s stock has witnessed a staggering uptick of +273% and a monumental climb of almost 1000% in the last decade, firmly eclipsing broader index performances and the Zacks Computer-Software Markets’ growth. Microsoft’s continued growth trajectory hinges on its enterprise-to-consumer software solutions, leading cloud capabilities through Microsoft Azure, and strategic acquisitions, including LinkedIn, Skype, and most recently Activision Blizzard. The integration of artificial intelligence in its software offerings, coupled with a stake and long-term partnership in OpenAI, positions Microsoft for sustained growth. The company’s fiscal second quarter results, due next Tuesday, are expected to reflect a substantial 19% increase in EPS to $2.76 per share, with quarterly sales forecasted to jump by 16% to $61.03 billion. This robust performance is indicative of Microsoft’s potential to deliver double-digit percentage growth on both its top and bottom lines in FY24 and FY25.
Trend Micro: Momentum and Recovery
Trend Micro, a Japan-based software solutions provider, has emerged as a potential frontrunner with a Zacks Rank #1 (Strong Buy) and an “A” Zacks Style Scores grade for Momentum. The company’s endpoint and web security software and services have bolstered its relevance, with its stock registering a commendable +15% surge over the past year and a remarkable +52% upswing in the last three months. Projections for fiscal 2024 EPS have escalated by 20% in the last 30 days, from initial estimates of $1.48 per share to an impressive $1.78 per share. This positions Trend Micro for a sharp rebound, reflecting an 86% growth from the projected annual earnings of $0.95 per share for FY23. Steady top-line growth further bolsters Trend Micro’s bottom-line recovery, setting the stage for a robust fiscal year ahead.
Trend Micro’s Positive Future Outlook
After an eventful 2023, Trend Micro, a leading player in the computer-software industry, is projected to see a 3% rise in FY23 and an impressive 9% increase in FY24, reaching a substantial $1.93 billion. This forecasted growth comes at a pivotal moment for the company, which will report its Q4 results for fiscal 2023 on February 15. If immediate indications align with the positive guidance, it could serve to reinforce the company’s strengthened outlook for FY24.
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The Foreseen Growth
Anticipated to surge, Trend Micro’s projected 3% rise in FY23 and 9% jump in FY24 reflects a promising trajectory amidst volatility in the computer-software industry. This forecast instills confidence in the company’s potential for sustained growth and solidifies its position as an industry leader.