Investing.com -- Guggenheim reshuffled its ratings on several key software stocks in separate notes Monday, highlighting shifting dynamics within the industry.
The firm made notable changes to its outlook on Workday (NASDAQ:WDAY), Palo Alto Networks (NASDAQ:PANW), MongoDB (NASDAQ:MDB), and Dynatrace (NYSE:DT).
Workday was upgraded from Sell to Neutral. Guggenheim notes that revenue reductions may be a thing of the past for Workday, with the company setting more realistic growth expectations.
"We believe growth expectations are now properly set, which in our view justifies our upgrade to Neutral from Sell," the analysts stated. While challenges in the new business environment persist, Workday's moves to embrace partnerships and expand into the SMB market have created a more balanced growth setup.
In contrast, Palo Alto Networks was cut from Neutral to Sell, with a new price target of $130 a share. Guggenheim cites declining new annual recurring revenue (ARR) over the past five quarters and softening momentum.
Despite investor confidence, the firm expressed concerns, stating that checks indicate a "subtle softening in momentum." They also warned of potential headwinds from US Federal IT spending moderation. The analysts also noted skepticism about the company’s free cash flow margin guidance.
MongoDB was upgraded from Neutral to Buy, with a new price target of $300. Guggenheim is optimistic about MongoDB's future, dismissing recent concerns about Atlas (NYSE:ATCO) consumption deceleration. The firm believes Atlas consumption trends are stable, with a potential acceleration in growth. They anticipate MongoDB "gracefully maneuvers the future" while balancing growth and margin expansion.
Finally, Dynatrace was cut from Buy to Neutral, with the previous price target of $64 withdrawn. Guggenheim pointed to potential risks in ARR guidance for FY26 and limited upside in the second half of FY25. Despite Dynatrace's strong position in the evolving Observability market, the firm sees "guidance risk ahead" due to market changes and potential pricing pressures.