Buy the Dip: 2 Tech Stocks Down More Than 50% in 2022

: INFA | Informatica Inc. News, Ratings, and Charts

INFA – The tech industry is expected to achieve significant growth this year, driven by the increasing tech budgets and rising adoption of advanced technologies. Although the tech sell-off this year has led fundamentally sound tech stocks Informatica (INFA) and Mitek Systems (MITK) to slump more than 50% year-to-date, we think this could be the right opportunity for investors to scoop up these shares to take advantage of the dip. Read more…

Soaring inflation and fears of the economy tipping into a recession have triggered a brutal tech sell-off this year, as evident by the tech-heavy NASDAQ Composite sinking over 31% in 2022. The inflation hit a new 40-year high in May 2022, compelling the Federal Reserve to raise its benchmark interest rate by 0.75 percentage points, marking its most aggressive hike since 1994, which could inject more volatility into the market.

On the other hand, the tech industry has been thriving over the past two years, and the momentum is expected to remain strong as organizations build the next iteration of the hybrid workforce, strengthen supply chains, take cloud and everything-as-a-service to the next level, and increasingly adopt advanced technologies like the IoT, AI, and Meta. The tech budgets in the United States are expected to expand by 6.7% in 2022.

Given the industry’s long-term prospects, we think investors should buy the dips in fundamentally sound tech stocks Informatica Inc. (INFA) and Mitek Systems, Inc. (MITK) which slumped more than 50% in price this year.

Informatica Inc. (INFA)

INFA develops an artificial intelligence-powered platform that connects, manages, and unifies data across multi-cloud, hybrid systems at an enterprise scale in the United States.

On June 15, INFA announced an expanded partnership with Snowflake Inc. (SNOW), a Data Cloud company, and launched a new enterprise data integrator, a native application in Snowflake Marketplace, to drive increased value for their joint customers. With the new integrator, customers will be able to use the power of the Intelligent Data Management Cloud (IDMC) Platform to integrate a wide range of enterprise application data in the Snowflake Data Cloud. This is expected to help the company provide a compelling experience to customers.

INFA’s total revenues increased 8.6% from the prior-year quarter to $362.35 million in the fiscal quarter ended March 31, 2022. Gross profit for the quarter came in at 278.55 million, reflecting an increase of 8.7% year-over-year, while its net cash provided by operating activities stood at $70.16 million, up 8% from the prior-year quarter.

Analysts expect INFA’s revenue for the fiscal quarter ended December 2022 to come in at $465.77 million, indicating an increase of 14.5% year-over-year. Also, the company’s EPS is expected to grow 28.2% year-over-year to $0.26 in the same period.

INFA’s stock has slumped 51.1% year-to-date to close the last trading session at $18.09.

INFA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, translating to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

INFA also has a B grade in Growth and Sentiment. It is ranked #2 of 24 stocks in the Software – SAAS industry.

Beyond what is stated above, we’ve also rated INFA for Momentum, Stability, Value, and Quality. Get all the INFA ratings here.

Mitek Systems, Inc. (MITK)

MITK develops, markets, and sells mobile image capture and digital identity verification solutions in the United States, Europe, Latin America, and internationally. 

On March 23, MITK announced the acquisition of the UK’s leading KYC (know your customer) technology pioneers, HooYu, to enhance the company’s fraud detecting resources. The acquisition helps businesses understand their customers’ true identities by linking biometric verification with real-time bureau and sanction database checks. This is expected to help MITK’s customers optimize workflows and accelerate the deployment of identity solutions across channels.

MITK’s total revenue increased 20.6% year-over-year to $34.71 million in the fiscal second quarter ended March 31, 2022. Its operating income grew 102.8% from the year-ago value to $4.83 million, while its net income improved 87.5% year-over-year to 1.91 million. The company’s net income per share increased 100% from its year-ago value to $0.04.

The consensus EPS estimate of $0.86 for the fiscal year ending September 2022 represents a 13.2% improvement year-over-year. The consensus revenue estimate of $140.58 million for the same quarter represents a 17.4% increase from the same period last year. MITK also beat the consensus EPS estimates in each of the trailing four quarters.

The stock has slumped 51.6% year-to-date to close the last trading session at $8.60.

It is no surprise that MITK has an overall B rating, equating to Buy in our POWR Ratings system. The stock has an A grade in Growth and a B in Value and Quality. Out of the 156 stocks in the Software – Application industry, MITK is ranked #9.

In addition to the POWR Ratings grades I’ve just highlighted, you can see the MITK’s ratings for Momentum, Stability, and Sentiment here.

INFA shares were trading at $18.66 per share on Friday afternoon, up $0.57 (+3.15%). Year-to-date, INFA has declined -49.54%, versus a -22.34% rise in the benchmark S&P 500 index during the same period.

About the Author: Komal Bhattar

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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