With Europe witnessing a sharp rise in COVID-19 infections, some countries, including the Netherlands and Austria, have imposed partial lockdowns to prevent the spread of the virus. Investors were watching the European situation closely when the World Health Organization last week announced the emergence of a heavily mutated strain of the COVID-19 virus named ‘Omicron.’
As of November 28, 2021, the Omicron variant had spread worldwide, with thirteen infection cases reported in the Netherlands and two each in Denmark and Australia. U.K. Health Minister Sajid Javid said that the variant “may be more transmissible” than the Delta strain and that “the vaccines that we currently have may be less effective.” Against this backdrop, the work from home trend could be sustained in the near term. According to a Small Business Trends report, 32% of all employees worldwide will be remote workers by the end of 2021, up from 17% of employees in 2019.
So, with countries once again imposing social distancing norms and travel restrictions to keep the new variant at bay, it could be wise to add work-from-home stocks DoorDash, Inc. (DASH), Roku, Inc. (ROKU), and Teladoc Health, Inc. (TDOC) to one’s portfolio now. Wall Street analysts expect these stocks to soar in price in the near term.
DoorDash, Inc. (DASH)
San Francisco-based DASH operates a logistics platform, DoorDash, which connects merchants, consumers, and Dashers. It offers order pickup that allows customers to place advance orders, skip lines and pick up their orders. Also, DoorDash for Work provides merchants with group orders and catering orders for businesses and events.
On November 9, 2021, DASH announced the acquisition of Finland-based Wolt Enterprises OY for £7 billion ($8.09 billion). The deal should help DASH enter 22 additional markets, such as Germany, Serbia, Croatia, Denmark, and Sweden. The company’s CEO Tony Xu said, “Joining forces with Wolt will allow us to accelerate our international growth, while elevating our focus on the U.S.”
DASH’s revenue for its fiscal third quarter, ended September 30, 2021, increased 45% year-over-year to $1.27 billion. The company’s current liabilities for the nine months ended September 30, 2021, decreased 4.5% year-over-year to $1.33 billion, versus the same period ended September 30, 2020. Its free cash flow for the nine months ended September 30, 2021, increased 85.5% year-over-year to $358 million compared to the prior-year period.
Analysts expect DASH’s EPS for the quarter ending December 31, 2021, to increase 89.5% year-over-year to $0.28. Its revenue for its fiscal year 2021 is expected to increase 68.7% year-over-year to $4.87 billion. The stock has gained 32.4% in price over the past six months to close Friday’s trading session at $187.92. Wall Street analysts expect the stock to hit $241.18 in the near term, which indicates a potential 29% upside.
Roku, Inc. (ROKU)
ROKU operates a television streaming platform. Its streaming players and television-related audio devices are available across the United States through direct retail sales and licensing arrangements with service operators. The San Jose, Calif., company enables customers to discover and access various streaming content and allows content publishers to reach its user base of active accounts and utilize its billing services and data insight tools.
On September 6, 2021, ROKU announced that it would launch its streaming players in Germany later this year. This happens to be its second big European rollout after the U.K., and it seeks to capitalize on the pandemic-driven shift towards watching more video on demand. According to Arthur Van Rest, the executive leading ROKU’s international expansion, “TV and the way that it’s being consumed are shifting dramatically–and we are right at the heart of that.”
For the fiscal third quarter, ended September 30, 2021, ROKU’s net revenue increased 50.5% year-over-year to $680 million. The company’s gross profit increased 69% year-over-year to $363.90 million. Its Average Revenue Per User (ARPU) increased 49% year-over-year to $40.10 on a trailing 12-month basis. Also, its adjusted EBITDA increased 132% year-over-year to $130.10 million.
ROKU’s EPS and revenue for its fiscal year 2021 are expected to increase 1,228.6% and 57%, respectively, year-over-year to $1.58 and $2.79 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. It has declined 27.4% in price over the past month to close Friday’s trading session at $235.16. However, Wall Street analysts expect the stock to hit $408.24 in the near term, which indicates a potential 73.7% upside.
Teladoc Health, Inc. (TDOC)
Dallas, Tex.-based TDOC provides virtual healthcare services with a portfolio of services and solutions that include medical subspecialties from non-urgent, episodic needs, such as flu and upper respiratory infections, to chronic, complicated medical conditions. Its brands include Teladoc, Livongo, Advance Medical, Best Doctors, Better Help, and HealthiestYou.
On October 6, 2021, TDOC announced that its primary care service, Primary360, was available to commercial health plans, employers, and other organizations that sponsor healthcare for individuals and families across the United States. The new primary care model delivers greater care access and health engagement, while filling preventive and chronic care gaps for two-thirds of new members that lack regular primary care. So, it could lead to increased demand for these services.
TDOC’s revenue for the fiscal third quarter, ended September 30, 2021, increased 81% year-over-year to $522 million. The company’s total visits increased 37% year-over-year to 3.90 million. Also, its adjusted EBITDA increased 70.6% year-over-year to $67.40 million.
Analysts expect TDOC’s EPS for the quarter ending December 31, 2021, to grow 81.8% year-over-year to $0.56. Its revenue for its fiscal year 2021 is expected to increase 84.7% year-over-year to $2.02 billion. Its shares have declined by 22.4% over the past month to close Friday’s trading session at $109.61. However, Wall Street analysts expect the stock to hit $162.45 in the near term, which indicates a potential 47.7% upside.
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DASH shares were trading at $181.66 per share on Monday morning, down $6.26 (-3.33%). Year-to-date, DASH has gained 27.26%, versus a 25.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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