Goldman Sachs analyst upgrades software sector

NEW YORK - A Goldman Sachs analyst raised her rating for the software sector to "Attractive" from "Neutral" Friday, saying a variety of factors should help software companies' stocks moving into the second half of the year.

In a client note, Goldman analyst Sarah Friar said checks and surveys show signs the software industry is stabilizing and "even some modest, early signs of recovery." Moving deeper into 2009, she also thinks some software spending budgets will "loosen further," noting that these companies tend to perform best in the second part of the year.

She also said that "software valuations remain highly discounted relative to historical levels, currency headwinds are abating, and M&A activity in the industry continues to heat up."

Friar upgraded shares of SuccessFactors Inc. to "Buy" from "Neutral," citing positives such as indications that its business is stable and management's willingness to cut costs. She raised her price target to $11 from $9.

SuccessFactors shares rose 39 cents, or 4.7 percent, to finish trading at $8.68.

Friar also downgraded shares of CA Inc. to "Neutral" from "Buy" and lowered her price target by $2 to $24, saying that the company is still an "underappreciated asset" but investors will probably "look for higher-growth options to capture a recovery" in the sector.

CA shares fell 12 cents to finish trading at $16.44.

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