BMO Capital picks Dynatrace and ServiceNow alongside Okta for rest of 2026

what happened

BMO Capital Markets has updated its software recommendations for the rest of 2026. Dynatrace and ServiceNow were added to the roster, which still includes Okta. Outperform ratings remain on all three, and the bank raised its price targets for Dynatrace and ServiceNow, while its earnings forecasts stayed the same, according to a report published by GuruFocus.

Analyst Keith Bachman said Okta's rally this year has raised expectations ahead of its October-quarter results, which makes the near-term bar tougher. He sees Dynatrace and ServiceNow facing easier setups in the near term. For ServiceNow, BMO projects current remaining performance obligations, a measure of contracted revenue not yet recognized, to rise roughly 20% year over year in the third quarter on a constant-currency basis. Organic growth could come close to 20%, similar to recent quarters.

Bachman also pointed to ServiceNow's expansion in security, following its purchases of Armis and Veza. According to the note, both businesses have beaten expectations since joining the company, and Armis has helped lift sales of other security products.

why it matters

Software stocks are sensitive to expectations for corporate spending and growth, so a shift in analyst ratings can influence sentiment across the sector. Investors watching Okta will look at its October-quarter report against a higher bar, while ServiceNow's security acquisitions and backlog trends remain the key points to track.

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