What The Brexit Means For Software Stocks

In view of Friday’s European Referendum vote on Brexit, or Britain’s exit from the European Union, Brean Capital’s Yun Kim said in a report that currency rates could exhibit “greater volatility” in the near term, impacting the overall results for software companies that have meaningful exposure outside the US.

Analyst Yun Kim noted that revenue mix estimates for software companies under coverage:

• salesforce.com, inc. (NYSE: CRM) – UK Exposure: 5 percent, European Exposure: 17 percent
• Tableau Software Inc (NYSE: DATA) – UK Exposure: 14 percent, European Exposure: 28 percent
• Intuit Inc. (NASDAQ: INTU) – UK Exposure: <5 percent, European Exposure: <5 percent
• Manhattan Associates, Inc. (NASDAQ: MANH) – UK Exposure: 6-7 percent, European Exposure: 12-13 percent
• MicroStrategy Incorporated (NASDAQ: MSTR) – UK Exposure: 15 percent, European Exposure: 30 percent
• Qlik Technologies Inc (NASDAQ: QLIK) – UK Exposure: 10 percent, European Exposure: 49 percent
• Varonis Systems Inc (NASDAQ: VRNS) – UK Exposure: 18 percent, European Exposure: 35 percent
• Workday Inc (NYSE: WDAY) – UK Exposure: 8 percent, European Exposure: 16-17 percent

“We note that INTU has the least amount of exposure outside of the U.S. (less than 5% of revenue), with MANH and CRM having less than 10% exposure in the U.K. based on our estimates,” Kim wrote.

Ratings, Price Targets

• Salesforce – Rated Buy, PT: $110
• Tableau Software – Rated Hold
• Intuit – Rated Buy, PT: $130
• Manhattan Associates – Rated Buy, PT: $75
• MicroStrategy – Rated Hold
• Qlik Technologies – Rated Hold
• Varonis Systems – Rated Buy, PT: $35
• Workday – Rated Sell, PT: $55