The Internet Software and Services space is gathering momentum owing to robust IT spending on solutions that support hybrid operating environments. The level of technology adoption by businesses and the proliferation of connected consumer devices, which might help people connect and do business online, is also accelerating the industry’s growth.
Outstanding penetration of mobile devices among users makes sense for businesses to invest heavily in web-based infrastructure, applications and security software. Within the Technology sector, the Zacks-defined Internet Software industry is currently in the top 27% of the Zacks Industry Rank.
In the past year, the industry has provided 41.6% returns. Year to date, it has advanced 22.1%. Since the industry is ranked in the top half of Zacks Ranked Industries, we expect the Internet Software industry to outperform the market over the next three to six months.
We recommend five stocks from this space that have strong potential for sparkling short-term returns. These are — Bentley Systems Inc. BSY, Synchronoss Technologies Inc. SNCR, Zuora Inc. ZUO, Workday Inc. WDAY and VTEX VTEX.
Internet Software Industry Thriving
The Internet software industry is benefiting from continued demand for a global digital transformation. Growth prospects are alluring primarily due to the rapid adoption of Software as a Service (SaaS), which offers flexible and cost-effective delivery of applications.
SaaS attempts to deliver applications to any user, anywhere, anytime and on any device. It has been effective in addressing customer expectations of seamless communications across multiple channels, including voice, chat, email, web, social media and mobile.
The growing need to secure cloud platforms amid rampant incidences of cyber-attacks and hacking is driving demand for web-based cybersecurity software. As enterprises continue to move their on-premise workload to cloud environments, application and infrastructure monitoring is gaining importance. This is increasing the demand for web-based performance management monitoring tools.
5 Must-Buy Internet Software Stocks
These five stocks have strong growth potential for the rest of 2024 and have seen positive earnings estimate revisions in the last 60 days. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past month.
Zacks Investment Research
Image Source: Zacks Investment Research
Bentley Systems Inc.
Bentley Systems provides infrastructure engineering software solutions in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. BSY offers open modeling and open simulation applications for infrastructure design integration.
BSY’s offerings include MicroStation, OpenRoads, OpenRail, OpenPlant, OpenBuildings, OpenBridge, OpenSite, OpenFlows, STAAD and RAM, SACS, MOSES, AutoPIPE, SITEOPS, CUBE, DYNAMEQ, EMME, and LEGION, and geoprofessional applications for modeling and simulation of near and deep subsurface conditions.
Robust Price Upside for BSY Stock
Bentley Systems has expected revenue and earnings growth rates of 11% and 20.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.8% over the last 60 days.
The average price target of brokerage firms represents an increase of 21.3% from the last closing price of $49.33. The brokerage target price is currently in the range of $50-$64.
Synchronoss Technologies Inc.
Synchronoss Technologies provides cloud, messaging, digital, and network management solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. SNCR offers Synchronoss Personal Cloud platform that allows customers' subscribers to backup and protect, engage with, and manage their personal content.
SNCR also provides Synchronoss' Messaging platform comprising advanced messaging platform and email suites, and OnboardX products, including mobile content transfer solution that offers wireless transfer of content from one mobile smart device to another in a carrier retail location or at home/work.
Astonishing Price Upside for SNCR Shares
Synchronoss Technologies has expected revenue and earnings growth rates of 5.5% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 60 days.
The average price target of brokerage firms represents an increase of 78% from the last closing price of $13.32. The brokerage target price is currently in the range of $11-$40.
Zuora Inc.
Zuora provides a monetization suite for modern businesses to help companies launch and scale new services and operate dynamic customer-centric business models. ZUO offers Zuora Billing that allows customers to deploy various pricing and packaging strategies to monetize their recurring revenue streams, bill customers, calculate prorations when subscriptions change, and automate billing and payment operations.
Zuora Revenue is a revenue recognition and automation solution that accounting teams use to manage their complex revenue streams. Zuora Payments provides payment orchestration services for companies looking to operate globally.
Zephr is a digital subscriber experience platform that helps companies orchestrate dynamic experiences that increase conversion, reduce churn, and nurture ongoing subscriber relationships. ZUO also provides Zuora Platform, an orchestration engine for all subscription data and processes.
Excellent Price Upside for ZUO Stock
Zuora has expected revenue and earnings growth rates of 6.2% and 69.7%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 33.3% over the last 60 days.
The average price target of brokerage firms represents an increase of 41.7% from the last closing price of $8.45. The brokerage target price is currently in the range of $10-$15.
Workday Inc.
Workday has benefited from solid customer wins, strategic expansions and strong contract renewals. WDAY is benefiting from healthy demand for financial and human capital management solutions in various end markets, including education, financial services and healthcare. WDAY’s collaboration with Salesforce to develop a leading-edge AI-powered solution will likely enhance workplace efficiency and employee satisfaction.
Impressive Price Upside for WDAY Shares
Workday has expected revenue and earnings growth rates of 15.6% and 19.4%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
The average price target of brokerage firms represents an increase of 22% from the last closing price of $240.94. The brokerage target price is currently in the range of $190-$352.
VTEX
VTEX provides a software-as-a-service digital commerce platform for enterprise brands and retailers. VTEX’s platform enables customers to execute their commerce strategy, including building online stores, integrating, and managing orders across channels, and creating marketplaces to sell products from third-party vendors.
VTEX has operations in Brazil, Argentina, Chile, Colombia, France, Italy, Mexico, Peru, Portugal, Romania, Singapore, Spain, the United Kingdom, and the United States.
Enormous Price Upside for VTEX Stock
VTEX has expected revenue and earnings growth rates of 16.1% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 60 days.
The average price target of brokerage firms represents an increase of 49.4% from the last closing price of $7.15. The brokerage target price is currently in the range of $8-$14.
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