The 2014 All-America Research Team: Software, No. 1: Kasthuri Rangan
Kasthuri RanganBank of America
Merrill LynchFirst-Place Appearances: 1
Total Appearances: 6
Analyst Debut: 2008Kasthuri Rangan of Bank of America Merrill Lynch seizes the top spot on this list, rising from the No. 2 position he held the past three years. Working out of San Francisco, Rangan reports on 25 U.S. software stocks and is bullish on the cloud and big-data subsectors. “Large, mature companies have seen growth decelerate as the bounce from economic recovery is behind us, which means they need to make more acquisitions and adopt subscription models,” he explains. “Cloud and big-data companies such as Salesforce.com, VMware and Splunk are in a structurally advantaged position.” Clients particularly laud the analyst for his coverage of San Francisco–based Salesforce.com, which provides customer relationship management software services. In June 2013, Salesforce announced its intention to buy Indianapolis’s ExactTarget, a cloud-marketing platform, for $2.5 billion. That prompted a one-day, 7.9 percent sell-off in the stock. Rangan, however, reiterated his buy rating, noting that “the pull back in the shares from overhang created by a large and dilutive acquisition represents an opportunity, since core growth is solid.” So far, so good. Year-over-year revenue for the fiscal quarter that ended July 31 soared 37.8 percent, to $1.32 billion, and the stock rose right along with it. By the middle of last month, it had rocketed 51.7 percent, to $57.57, outperforming the sector by 21.9 percentage points. The 45-year-old is “one of the old guard of grizzled sell-side software analysts,” says one admirer, “who brings a wealth of insight in helping investors understand the complex model transitions impacting the sector.” Rangan began his career as a technology analyst at Robertson Stephens & Co. before moving on to become a senior analyst covering software at RBC Dain Rauscher and then Wachovia Securities. Since 2005 he has covered this sector for BofA Merrill. He holds a bachelor’s degree in mechanical engineering from the College of Engineering in Madras, India, an M.S. in industrial engineering from Louisiana State University and an MBA from Tulane University’s Freeman School of Business in New Orleans.