'Office of the CFO': BMO starts coverage on Intuit, Bill.com and finance and biz software stocks
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BMO Capital Markets started coverage on eight software stocks that support finance and business operations, including Intuit (NASDAQ:INTU), Anaplan (NYSE:PLAN) and Bill.com (NYSE:BILL), calling the theme "office of the CFO."
Analyst Daniel Jester put outperform ratings on Avalara (NYSE:AVLR), Bill.com (BILL), Intuit (INTU), and Workiva (NYSE:WK) and market perform on Anaplan (PLAN), Coupa (NASDAQ:COUP), BlackLine (NASDAQ:BL), and Vertex (NASDAQ:VERX), noting all eight are likely to benefit, and in some cases, "lead," how software is transforming business finance.
"The value of Office of the CFO software has become clearer with the innumerable disruptions executives have faced over the past two years," Jester wrote in a note to clients. "We believe the pandemic has jump started the next leg in adoption of accounting and finance applications, as companies of all sizes look to build efficiency and resiliency in their back-office functions."
On Avalara (AVLR), which Jester has a $130 price target, the company has benefited from the surge in e-commerce and economic nexus laws over the past few years. As the calendar firmly gets into 2022, these impacts may be "less acute,"but there are a number of incremental growth drivers, including new products, new enterprise market growth, international opportunities for compliance and reporting, "all of which we think can drive sustained low/mid-20% organic growth with the potential for upside over the next few years." 
Bill.com (BILL), which Jester has a $209 price target, is a leader in the small business software market, Jester explained, helping SMBs digitize their back office. It's also a beneficiary as payments shift from paper to electronic.
"A former âhigh-flyerâ in software, shares are now down 50% from their peak despite what we would argue as little fundamental change in the business," Jester explained. "Organic revenue growth has steadily accelerated over the past year (likely [more than] 60% [year-over-year] in FY2Q22E) and we think there is another path to upside in the coming quarter." 
Intuit (INTU) continues to add to its portfolio of products, including Credit Karma and Mailchimp, one reason Jester has a $625 price target on the stock.
"The Mailchimp acquisition, in particular, opens further areas for potential growth and investment around the SMB 'front office,' as we see increasing unification under a platform operating model for small business that combines finance, SCM, and FO applications and is supplemented by APIs and integrated payments," Jester explained. "We view the shares as a core portfolio holding in software given the track record of success and very large addressable & adjacent markets where Intuit can grow consistently in the low to mid-teens with potential upside."
Workiva (WK) is likely to benefit thanks to strong activity in capital markets and the continued push to ESG reporting, "with the potential for significant compliance burdens for large companies, with last yearâs acquisition of iPaaS provider OneCloud is supportive."
In addition, Jester put a $49 price target on Anaplan (PLAN), $135 price target on Coupa (COUP), $92 price target on BlackLine (BL) and $15 on Vertex (VERX).
Last month, it was reported that the U.S. Federal Trade Commission was investigating Intuit (INTU) and its tax-preparation unit, TurboTax.