Investing.com -- Software sentiment and valuations have rebounded quarter-to-date, but investors remain cautious on fundamentals, especially across small-cap SaaS companies, according to Oppenheimer analyst Ken Wong. The firm has observed an uptick in merger and acquisition interest with increased software deal activity. While some stocks face headwinds from macro pressures and organizational changes, others are benefiting from demand momentum and robust pipelines heading into third quarter earnings season.
1. Docebo Inc (NASDAQ:DCBO) - Sentiment is positive, evident by the unfilled share issuer bid, with expectations for second-half momentum to extend into the third quarter, said the analyst. Oppenheimer reports growing confidence that federal deals will materialize in the second half with a large pipeline into the seasonally strong third quarter, consistent with management commentary from the OpCo Tech Conference. With low participation in the prior share issuer bid, management focus will likely shift to share buybacks. Investors expect revenue slightly above the high-end of third quarter outlook of $69.5 million to $69.7 million, with potential upside likely flowing through to EBITDA. Product and go-to-market investments starting in the second half potentially limit earnings per share upside. Oppenheimer raised its price target to $35 from $25.
2. BILL Holdings, Inc (NYSE:BILL) - Sentiment is cautiously upbeat, with improving business dynamics offset by concerns of macro pressures on small and medium business spend and potential operational disruptions from recent restructuring, the analyst noted. Investor expectations remain low, calling for approximately a one-point beat to consensus revenue of $439 million and prudent guidance. The buyside is still handicapping results to account for potential workforce optimization uncertainty, financial institution partner churn, and potential for sales and engineering volatility. Oppenheimer expects take rate to be flat or slightly up quarter-over-quarter. Investors expect continued EBIT and earnings per share outperformance of $115 million and $0.98 post-reduction in force, but reinvestment commentary of approximately $30 million could limit upside.
3. SimilarWeb Ltd (NYSE:SMWB) - Sentiment is increasingly upbeat on growing confidence in the large deal pipeline driven by AI optimism, the analyst noted. The improving top-line and AI dynamics are not encountering margin compression due to AI costs. Investors expect a revenue beat towards the upper-end of guidance of $80.5 million to $82.5 million, with Street consensus at $81.7 million, and top-line surprise largely flowing through to margins and EBIT. Investors anticipate management to narrow the lower-end of fiscal 2026 revenue, with hope of bumping up the high-end as well.
Original Article
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