Intuit, monday.com, Workiva among top application software stocks at Citi
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Investment firm Citi said on Wednesday that Intuit (NASDAQ:INTU), monday.com (NASDAQ:MNDY) and Workiva (NYSE:WK) are its top application software stocks for 2023, despite the slowing macro environment.
Analyst Steven Enders noted there are "tactical opportunities" for investors across the application software space, with the preference to favor companies that are "more defensive" and could beat estimates, as well as those who have improving margin profiles and a "relatively defensive valuation."
"While some consensus view is emerging of a rotation to growth in [calendar year 2023] once we have some level of macro clarity, we prefer a more defensive stance in the [near-term with] opportunities for growth through the year," Enders wrote in a note to clients.
Intuit (INTU) is favored due to the potential for upside while Israeli-based monday.com (MNDY) and Workiva (WK) are preferred due to regulatory catalysts and new products.
In addition, Citi upgraded Pegasystems (PEGA) due to its exposure in enterprise automation, as well as improving margin situation and low valuation. The firm downgraded BlackLine (BL), citing "elevated" M&A risk premium and concern that it may miss estimates. 
Pegasystems (PEGA) rose 1.6% in premarket trading, while BlackLine (BL) fell more than 3%.
Citi also started new pair trades, going long Workiva (WK) and short BlackLine (BL) and long Pegasystems (PEGA) and short Appian (APPN).
Earlier this month, Piper Sandler said monday.com (MNDY) had a good chance of achieving 20% or more compound annual growth rate.
Analysts are largely negative on Pegasystems (PEGA). It has a SELL rating from Seeking Alpha authors, while Wall Street analysts rate it a HOLD. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates PEGA a STRONG SELL.