AYX: 3 Under the Radar Software Stocks That Could Rally by More Than 45%

The demand for software products and services to facilitate a remote lifestyle has accelerated since last year. And, despite the Biden administration’s efforts to bring the country back to its pre-pandemic economic level this year, progress on the vaccination front, or a lack thereof, remains a concern.

The United States vaccination rate is the lowest among the seven prosperous democracies, with just 61.94% of its population fully vaccinated, according to a University of Oxford study. This, coupled with the resurgence of COVID-19 cases, suggests a continuation of remote lifestyle for the foreseeable future. Perhaps tellingly, established multinationals such as Microsoft Corporation (MSFT) and Alphabet, Inc. (GOOGL), among others, have postponed their office reopening plans.

Because the software industry is expected to witness sustained demand in the coming months, Wall Street analysts expect lesser-known software stocks Alteryx, Inc. (AYX - Get Rating), Zix Corporation (ZIXI - Get Rating), and iHuman Inc. (IH - Get Rating) to rally by more than 45% in price.

Click here to check out our Software Industry Report for 2021

Alteryx, Inc. (AYX - Get Rating)

AYX provides an end-to-end data analytics platform for data analysts and scientists worldwide. The Irvine, Calif., company also offers cloud-based solutions that allow users to share workflows in a centralized repository.

On July 30, AYX became an Elite Technology Partner of Snowflake Inc. (SNOW), a provider of a cloud-based data platform. The partnership aims to provide customers of AYX and SNOW with a unified platform for various functionalities. This collaboration should allow AYX to grow significantly in the modern analytics space.

AYX became the Global Elite Partner of multinational company PricewaterhouseCoopers (PwC) on July 29. This marks an expansion of the two companies’ relationship, which was established earlier this year for a digital transformation. The partnership is expected to afford AYX the ability to stretch automation further in its line of business.

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In its second fiscal quarter, ended June 30, AYX’s total revenue increased 24.8% year-over-year to $120.07 million. Its non-GAAP gross profit improved 24.5% from the prior-year quarter to $109.53 million. Its cash, cash equivalents, and restricted cash at the end of the period was $286.18 million, up 120.7% from the same period last year.

A $0.09 consensus EPS estimate for the next year (fiscal 2022) indicates a 152.9% improvement from the current year. Likewise, the $626.05 million consensus revenue estimate for the next year reflects an 18.3% year-over-year increase. Moreover, AYX has an impressive surprise earnings history; it has topped consensus EPS estimates in each of the trailing four quarters. AYX’s stock has gained 2.5% in price over the past month to close yesterday’s trading session at $71.10.

Of the eight Wall Street analysts that have rated AYX, seven rated it Buy while one rated it Hold. The $108.86, 12-month median price target indicates a 53.11% potential upside. The price targets range from a low of $80.00 to a high of $159.00.

Zix Corporation (ZIXI - Get Rating)

ZIXI is a software company that provides email threat protection to its users against zero-day malware, ransomware, and phishing attacks, protection against data loss, and cloud backup. The company operates through enterprise-quality technology and high-touch service. ZIXI is headquartered in Dallas, Tex.

Earlier this year, ZIXI expanded its global partner program in Germany and the United Kingdom. Regarding this expansion, Dave Wagner, CEO of ZIXI, said, “Our unique relationship as a Microsoft top partner allows our partners to build a full portfolio of security, compliance and productivity solutions from one vendor. We are excited to bring the dedicated level of support we are known for to both markets, as we continue to expand our dedicated, in country, resources across all key functions.”

ZIXI’s revenue increased 17.8% year-over-year to $62.83 million in its second fiscal quarter, ended June 30. Its non-GAAP adjusted gross profit improved 7.4% from the same period last year to $31.32 million, while adjusted EBITDA rose 4.6% year-over-year to $13.26 million.

The Street’s $0.67 EPS estimate for the next year (fiscal 2022) reflects a 13.6% rise year-over-year, while the Street’s revenue estimates of $288.04 million for the next year indicates a 13.6% increase from the current year. The stock has gained 33.8% in price over the past year to close yesterday’s trading session at $7.49.

Three Wall Street analysts that rated ZIXI have rated it Buy. The 12-month median price target of $11.17 indicates a 49.13% potential upside. The price targets range from a low of $10.50 to a high of $12.00.

Click here to checkout our Cybersecurity Industry Report for 2021

iHuman Inc. (IH - Get Rating)

IH supplies educational entertainment products and services to individual users and educational organizations. It is headquartered in Beijing, China. The company went public in an IPO of its American Depositary Shares (ADS) on October 9, 2020.

For the first fiscal quarter, ended March 31, IH’s total revenue increased 190.6% year-over-year to $34.60 million. This can be attributed to a 232.7% year-over-year rise in revenues from learning services to $29.28 million. Its gross profit improved 211.8% from the prior-year quarter to $24.61 million. The company’s adjusted net income and adjusted net income per ADS came in at $2.17 million and $0.04, respectively, representing a substantial improvement from their negative year-ago values.

Analysts expect IH’s EPS to increase 116.7% year-over-year to $0.04 for the next year (fiscal 2022). A $244.28 million consensus revenue estimate for the next year reflects a 54.9% year-over-year improvement.

IH’s 12-month median price target of $13.40 indicates a 105.21% potential upside.

Click here to check out our Software Industry Report for 2021

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AYX shares were trading at $70.52 per share on Wednesday afternoon, down $0.58 (-0.82%). Year-to-date, AYX has declined -42.10%, versus a 20.49% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...