Citi opens ‘positive catalyst watch,’ names top picks in application software

Citi analyst Tyler Radke opened a "positive catalyst watch" on Neutral-rated Guidewire (GWRE). Cloud optimization and spending rationalization is likely to persist, but there are some offsets from traditional industry customers like the public sector, financial services, and healthcare which may experience more latent digitization tailwinds from clearing of regulatory/security hurdles around cloud adoption, Radke tells investors in a research note. This could potentially benefit Guidewire, says the analyst. He believes companies that show "good sales efficiency with large market opportunities that don’t require evangelical sales motions are among the best positioned" in the application software sector for 2023. His top picks are MongoDB (MDB), Snowflake (SNOW) and Microsoft (MSFT).