M UpdateSoftware | North AmericaValuation Views 01/02/24 - Wrapping Up a Solid Year in SoftwareMorgan Stanley & Co. LLCKeith Weiss, CFAEquity Analyst Keith.Weiss@morganstanley.com +1 212 761-4149 Sanjit K SinghEquity Analyst Sanjit.Singh@morganstanley.com +1 415 576-2060 Meta A MarshallEquity Analyst Meta.Marshall@morganstanley.com +1 212 761-0430 Josh Baer, CFAEquity Analyst Josh.Baer@morganstanley.com +1 212 761-4223 Hamza FodderwalaEquity Analyst Hamza.Fodderwala@morganstanley.com +1 212 761-1083 Elizabeth Porter, CFAEquity Analyst Elizabeth.E.Porter@morganstanley.com +1 212 761-3632 SoftwareNorth AmericaIndustry ViewAttractiveSoftware closes the year modestly outperforming the broader market (+~50 bps), wrapping up a year of solid performance. Looking to 2024, we are excited about the runway remaining- GenAI, improving IT budgets, & expectations for improving margins underscore an attractive secular growth opportunity. Assessing Software – Price Performance52 Week HighCompany1 Week1 Month3 MonthYTD1 Year3 YearPrice% BelowSoftware Mean1.4%12.8%20.2%44.3%52.1%-19.0%14.9%Software Median1.2%11.8%19.8%42.3%48.8%-25.2%8.0%NASDAQ0.9%5.7%14.3%44.2%47.8%17.0%S&P 5000.8%5.0%11.2%24.6%26.4%28.1%PerformanceTop 10Short interest %1 Week Price Move1 Month Price MoveYTDRank Ticker12/28/2023Ticker12/28/2023Ticker12/28/2023Ticker12/28/20231AI29.8%EGHT10.8%S57.2%PLTR173.5%2SPT16.7%TWOU10.1%ESTC46.3%IOT172.5%3CHGG14.4%SQSP8.4%DOCU41.0%AI170.2%4PD13.0%MTTR7.5%ZI34.5%CRWD143.3%5EGHT12.0%LSPD6.0%PATH34.5%SHOP127.9%6DOCN9.9%BIGC5.6%EGHT32.7%FSLY125.5%7AYX9.8%SEMR4.9%FROG29.4%ESTC121.3%8PRO9.2%ZUO4.9%SEMR28.7%MDB111.9%9QLYS8.5%DOMO4.6%TOST28.5%PANW111.8%10TWOU8.5%ETWO4.4%ETWO28.0%HUBS103.7%Bottom 10Short interest %1 Week Price Move1 Month Price MoveYTDRank Ticker12/28/2023Ticker12/28/2023Ticker12/28/2023Ticker12/28/20231SCWX0.1%DCBO-5.0%CXM-19.9%TWOU-79.1%2SWI0.3%APPN-2.9%PLTR-10.9%CHGG-54.8%3WKME0.4%QLYS-2.6%APPF-9.0%ZI-37.5%4DCBO0.4%APPF-2.1%ORCL-8.6%SABR-27.8%5VERX0.5%COUR-2.0%YEXT-8.6%DOMO-25.8%6INST0.5%SABR-1.8%ASAN-7.2%BILL-23.5%7ORCL0.6%RPD-1.7%KVYO-7.0%ETWO-23.0%8KVYO0.6%TEAM-1.6%VERX-4.7%BOX-16.9%9MSFT0.7%KVYO-1.5%ADBE-4.5%DOCS-15.3%10CCCS0.8%PANW-1.3%SAPG-2.0%PD-11.0%Source: EikonAssessing Software – Where Are the Multiples? Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.January 2, 2024 05:01 AM GMTM Update2Exhibit 1:Overall Software Coverage Group Trading at 29% Below the Trailing 5-Year Average...9.4x3.9x7.4xMax at: 17.9xToday at: 7.3x5 year Avg: 10.2x0x2x4x6x8x10x12x14x16x18x20xJan-13Mar-13May-13Jul-13Sep-13Nov-13Jan-14Mar-14May-14Jul-14Sep-14Nov-14Jan-15Mar-15May-15Jul-15Sep-15Nov-15Jan-16Mar-16May-16Jul-...
