As the new trading year gets underway, investors may want to keep an eye on some software names that could benefit if a pickup in transaction activity materializes in the months ahead. “We see software as a key area of [mergers and acquisitions] in 2025 as animal spirits remain strong, capital markets reawaken, and with a friendlier FTC/DOJ,” the firm said in a note to clients this week. On top of a potentially more favorable regulatory environment under President-elect Donald Trump, analyst Alex Zukin said the sector has durability compared with other areas of the market, saying in a note last month that “oftentimes relative fundamentals trump absolute.” “Buckle your seatbelt, fill your cup, and check yourself, because it’s time to MAKE SOFTWARE GREAT AGAIN!” he said. Zukin screened for software stocks that could experience revenue growth over the next couple years and could also be a target of consolidation. In fact, one name that turned up on the list could potentially be in talks to be acquired. That said, it’s important to note that it’s currently uncertain as to whether any of the names provided are actually involved in any merger talks. Here are some of the stocks that appear on the list. F5 – the stock with the largest market cap in the screen – rallied 40.5% in 2024, outperforming the broader market. That outperformance has continued into this year, as it’s risen more than 3% year to date, more than the S & P’s nearly 2% year-to-date gains. On top of that, Wolfe forecasts 4% revenue growth for the company both this year and in 2026. However, most analysts on Wall Street have stepped to the sidelines on F5. According to data from LSEG, 12 of the 14 total analysts covering it have a hold rating, while only one has a buy rating. Not only that, its average price target of about $244 implies around 6% downside potential, as of Monday’s close. By contrast, most of the Street is bullish on Box , another name on the list. Among the 11 analysts covering the stock, eight have a strong buy or buy rating, while two have a hold rating. Additionally, its average target of roughly $37 reflects 20% upside from Monday’s close. While the stock has fallen around 1% in the first few trading sessions of 2025, it rose more than 23% in 2024. Looking ahead, Wolfe projects 6% revenue growth this year and 7% revenue growth in 2026. Unity Software – whose shares jumped around 9% in the first trading session of the new year after Roaring Kitty posted a cryptic gif on X – and Paycor HCM also appeared on the list. Those stocks have risen more than 13% and almost 63%, respectively, over the past three months after both of them saw massive declines in 2024, with Unity falling 45% and Paycor HCM sliding about 14%. When it comes to revenue growth, Wolfe anticipates that Unity will see 1% growth in 2025 and 8% in 2026. For Paycor HCM, the firm sees 11% revenue growth this year and 12% in 2026. On Monday, shares of Paycor HCM jumped more than 23% after Bloomberg News, citing people with knowledge of the matter, reported that rival Paychex is in advanced talks to acquire Paycor HCM . According to the sources, a deal could possibly be announced as soon as this week.
