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The 2014 All-Europe Research Team: Technology/Software, No. 2: Adam Wood & team

< The 2014 All-Europe Research Team
Adam Wood & team
Morgan Stanley
First-place appearances: 4

Total appearances: 19

Team debut: 1996

Morgan Stanley’s trio under the direction of London-based Adam Wood slips to second place after a year at No. 1. These researchers can boast “the broadest industry view and deepest knowledge of the sector,” one advocate asserts. Over the past year they have added one stock to their coverage universe, and they plan to expand their portfolio further this year. The team is positive on the sector, expecting it to benefit from improved macro conditions and even forecasting multiyear growth opportunities for several names. The course will not be without hurdles, however. “A major issue facing the software companies will be the move to more subscription-based revenues,” says Wood. “The market has generally been open to these shifts, so — if well communicated — this could be a positive.” Another critical concern, he notes, is “how both software and [information technology] services companies discuss the more general challenges posed by cloud computing.” One bright light has been Swiss banking-software maker Temenos Group, which the researchers upgraded from equal weight to overweight in January 2013. They cited confidence in the company’s most recent management changes, which installed a regime more focused on short-term sales execution; cost-cutting and improvements to the Temenos’s product mix; an appreciation for executives’ long-term vision of industry fundamentals; and valuation. Through year end the shares bolted 49.5 percent, to Sf25.20, far outdistancing the sector, which advanced 4.6 percent.

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