The software market is headed for a "modest but slow cyclical recovery," according to Deutsche Bank Securities analyst Brian Skiba, who slapped buy ratings on four infrastructure software names Friday.

Shares of Red Hat ( RHAT) were higher in morning trade but Mercury Interactive ( MERQ), Alteris ( ATRS) and NetIQ ( NTIQ) were all lower after Skiba started coverage of the stocks with a buy rating.

Although Skiba said there is no major catalyst for the sector, "pockets of technology innovation" like Java, Linux and 64-bit processing are fueling some segments, he said. Still, he cautioned that some of the higher-quality names already have priced in some good news and are trading close to their 52-week highs.

"Companies that are executing well and growing market share carry substantial valuation premiums, in our opinion," Skiba wrote in a research note. "We believe investors are being more selective, which tends to create sizable market cap for companies with strong fundamentals."

Skiba placed hold ratings on BEA Systems ( BEAS), BMC Software ( BMC) and Computer Associates ( CA) and reiterated his hold rating on Oracle ( ORCL).

All but Oracle were trading lower. Shares of Oracle gained almost 3% at $13.71 after it reported better-than-expected fourth quarter profits.

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