Amadeus: the re-opening may offset the macroeconomic context


Morgan Stanley | The Q3’22 survey of CIOs (Chief Information Officers) suggests a slowdown in IT budgets’ growth. Expectations for spending in 2022 have been cut by 100bp to 3%.

For 2023, growth of 2.8% is expected, so both figures would be below the pre-Covid average of 4.1%. The ratio of those CIOs who expect an increase in budgets vs a cut has fallen to 0.4x (vs 1.1x Q2’22), registering minimums if we exclude Q2’20.

This leads us to follow defensive stocks, preferring software business models with recurrent revenues and exposure to big companies and critical software.

Sage and SAP are the safe havens (92% and 75% of recurrent revenues respectively). We also like Amadeus and believe the re-opening may offset the macro context. We are cautious on Temenos and Hexagon (both UW).

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