IT Spending: Jefferies Sees Signs Of Hope

Is corporate IT spending showing signs of life?

Jefferies enterprise software analyst Katherine Egbert thinks so. She issued about a flurry of research notes today, saying various nice things about the improving climate, lifting targets and estimates for an assortment of stocks.

Egbert writes that a survey of IT security software resellers found signs of a pick-up: she writes that on average the 71 VARs surveyed now see 2009 spending up 9%, up from 7% in a comparable survey one quarter earlier. She writes that Q4 should show “a strong budget flush,” with a small majority expecting higher year-over-year sales in the quarter.

• Ergo, Egbert raised her rating on Symantec (SYMC) to Buy from Hold, with a target of $19, up from $17. She writes that “Symantec could benefit from pent-up IT demand for backup and enterprise security bundles, driven by regulatory and compliance requirements.” She raised her March 2010 fiscal year EPS to $1.37, from $1.32; for FY 2011 she goes to $1.52, from $1.44.


• She also repeated her Buy rating on Check Point Software (CHKP), while lifting her price target to $35, from $33; she reiterated a Buy on Sourcefire (FIRE), while upping her target to $30, from $25.


• Anticipating higher IT spending, Egbert also backed off her previously bearish stance on both VMware (VMW) and Citrix (CTXS). Egbert lifted both stocks to Hold from Underperform. For VMW, her new target is $40, up from $30. For CTXS, her target is now $40, up from $32.


• She also repeated her Buy rating on Microsoft (MSFT), raising her target to $30, from $29. “Corporate IT spending is on the rebound,” she writes. “And it now looks like the Windows 7 cycle is going to be bigger and quicker than most existing estimates,” she writes.