Stocks slipped Tuesday amid continued oil industry turmoil. Wall Street is also now in the midst of the busy part of first quarter earnings season, with many of the biggest names in tech and other bellwethers set to report their results over the next several weeks.
Meanwhile, governments around the world are starting to consider the best ways to begin to reopen parts of the economy amid continued coronavirus uncertainty. The stock market has already bounced back from its March 23 lows on the back of the Fed’s push to provide support and the stimulus package. There are also signs that social distancing might be working to help flatten the curve.
Despite the positivity, the market could dip again and volatility is likely to remain given the broad global economic uncertainty. That said, investors with a longer-term investing horizon might want to buy some growth-focused tech stocks at prices that could be viewed as cheap 12 months from now, no matter what happens in the near-term.
ServiceNow (NOW - Free Report)
ServiceNow provides cloud-based services and solutions to its over 6,200 enterprise customers, including “nearly 80% of the Fortune 500.” The digital workflow firm was added to the S&P 500 index in November 2019 and has expanded its partnership with Microsoft (MSFT - Free Report) to help it sell to highly regulated industries and house its full SaaS offerings on MSFT’s popular Azure cloud that competes alongside Amazon (AMZN - Free Report) for industry dominance.
NOW recently introduced new AI features and it has added more large customers, which will likely prove vital for its long-term stability and continued growth. Our current Zacks estimates call for NOW’s fiscal 2020 revenue to jump 26% to $4.35 billion, with FY21 projected to climb another 26% to hit $5.47 billion—both compare favorably to FY19’s 33% sales expansion. Meanwhile, its adjusted EPS figures are projected to surge 26% and 28.2%, respectively during this stretch.
ServiceNow’s recent earnings revision activity has trended in the wrong direction to help it hold a Zacks Rank #3 (Hold). NOW does boast an “A” grade for Growth in our Style Score system and it’s set to expand as businesses transform their operations for the digital age. Last quarter, CFO Gina Mastantuono said NOW is looking to scale its business to “$10 billion in revenue and beyond.”
NOW shares fell on Tuesday and are down roughly 20% from their highs. Despite the recent setbacks, ServiceNow stock is up over 215% in the last three years. Investors should pay close attention to its Q1 results and guidance that’s due out on April 29, as it will likely be the next major catalyst for the stock. And if NOW is able to impress Wall Street the stock could pop.
Zoom Video (ZM - Free Report)
Zoom is one of the hottest names on Wall Street, as millions of people flock to its video conferencing platform amid the stay-at-home push. ZM went public last April and it offers businesses, schools, and consumers the ability to connect via video, voice, chat, and content sharing. ZM’s offerings were already attractive in today’s digital world and its overnight proliferation could help Zoom in the long-run, especially if companies find the current remote environment relativity seamless and more people continue to connect remotely with friends and family.
ZM posted in early March strong Q4 results, with fiscal 2020 sales up 88%. Zoom also closed the year with roughly 82,000 customers with more than 10 employees, up 61% from a year ago. And these results don’t factor in the coronavirus. Founder and CEO Eric Yuan wrote in an April 1 blog post that “the maximum number of daily meeting participants, both free and paid, conducted on Zoom was approximately 10 million,” as of the end of December last year. This figure soared to “more than 200 million daily meeting participants” in March.
The rapid expansion of its user base has sparked some security concerns. Despite these worries, which the company has acknowledged and pledged to address, ZM stock has already raced back toward its highs since April 7. Zoom shares have skyrocketed over 110% this year and 120% since going public to crush fellow 2019 IPO standouts Uber (UBER - Free Report) and Lyft (LYFT - Free Report) .
Peeking ahead, our Zacks estimates call for ZM’s adjusted full-year earnings to jump 23% and 31%, respectively in FY21 and FY22. Zoom’s earnings revision activity has also trended completely upward, which is hard to do in the current environment, with its fiscal 2021 and 2020 figures up roughly 59%. This positivity helps ZM earn a Zacks Rank #1 (Strong Buy) right now. Plus, investors should note that Zoom’s balance sheet is pretty solid and its revenue is projected to surge another 48% this year.
CrowdStrike (CRWD - Free Report)
CrowdStrike is a cloud-focused cybersecurity firm that appears ready to expand for years to come. CRWD is also set to grow during the coronavirus downturn because businesses can ill afford to cut back on security, especially as millions of people work from home. CRWD, which went public in June 2019, has seen its stock price jump 35% in 2020. Yet CrowdStrike shares still have over 30% more room to run before they hit their August 2019 highs of roughly $100 a share.
The company beat our Q4 fiscal 2020 earnings and revenue estimates on March 19 and provided better-than-expected guidance. CrowdStrike also showed that it can attract larger clients to its SaaS subscription-based model. CRWD’s positive longer-term earnings revision picture helps it earn a Zacks Rank #2 (Buy) right now, alongside its “A” grade for Growth.
Peeking ahead, our estimates call for CrowdStrike’s fiscal 2021 revenue to surge 52%, with its 2022 sales set to jump another 29% higher to $938.99 million. Plus, CRWD’s adjusted fiscal year loss is expected to shrink from -$0.42 to -$0.12 a share in 2020. Better still, the company is projected to post positive adjusted earnings of +$0.15 in FY22. CrowdStrike’s cash position and its balance sheet are also solid and improved from last year.
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