< The 2015 All-Europe Research Team
Adam Wood & team
Morgan Stanley
First-Place Appearances: 5
Total Appearances: 20
Team Debut: 1996
The Morgan Stanley crew under the guidance of 40-year-old Adam Wood rises to reclaim first place after a year at No. 2. From their base in London, the researchers monitor 15 companies, up by two over the past year, and are guardedly positive on the group. “The major challenges for the sector are the transition to cloud and subscription payments for software companies, [as well as] the threat of cloud options and increasing Indian competition both putting pressure on prices and volumes for IT services companies,” Wood contends. He and his colleagues remain bullish on Switzerland’s Temenos Group, a leading provider of financial services software and their top pick in 2014. Originally upgraded from equal weight to overweight in January 2013 on the company’s potential as a turnaround story, the shares have rewarded their confidence. Morgan Stanley’s analysts have reiterated their position over the past 24 months, raising their target price along the way as earnings growth prospects and the broader European market have improved. By the end of last month, Temenos had rocketed to Sf28.05, soaring 69 percent since their upgrade and besting its regional peers by 52.3 percentage points. Over the trailing 12 months, the stock gained 10.3 percent, against the sector’s 6.3 percent rise. For the year ahead, Wood and team favor two French giants: Capgemini, a leading IT services provider, and 3D-design software specialist Dassault Systèmes. “We believe the market is underestimating the expansion of the available market at Dassault and hence its ability to accelerate topline growth,” he explains. “At Capgemini we see three catalysts for outperformance in 2015 — accelerating topline growth, potential capital return and new long-term margin targets.”