Gate News message, April 15 — Mizuho Securities released a research report identifying Cloudflare (NET.US), ServiceNow (NOW.US), and Atlassian (TEAM.US) as the most compelling software stocks to hold heading into the Q1 2026 earnings season. The firm noted that while the software sector has experienced significant valuation compression due to recent market volatility, the risk-reward profile has become increasingly attractive.
Over the past year, application software stocks covered by Mizuho declined an average of 61%, while infrastructure software gained 1% and cybersecurity stocks fell 22%. The team led by analyst Gregg Moskowitz noted that the forward 12-month EV/Sales ratio (enterprise value-to-sales ratio, a key valuation metric) currently sits 40% below the three-year average. SaaS (Software-as-a-Service) companies have underperformed by approximately 40 percentage points since February 2025, with concerns over AI disruption weighing heavily on the sector.
Mizuho maintained “Outperform” ratings on all three recommended stocks but adjusted price targets: Cloudflare from $255 to $235, ServiceNow from $190 to $150, and Atlassian from $185 to $145. The firm cited strong survey results for Cloudflare, better-than-expected large deal activity for ServiceNow, and anticipated subscription revenue acceleration for Atlassian. Moskowitz noted that Cloudflare’s 13% stock decline following the Claude Managed Agents announcement appeared overdone.
Mizuho also lowered price targets on several other software giants due to macroeconomic caution, including Microsoft (MSFT.US) from $620 to $515, Palantir (PLTR.US) from $195 to $185, Datadog (DDOG.US) from $170 to $145, and Check Point (CHKP.US) from $205 to $165.
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