The tech market saw a steep correction in its valuations, following a pandemic-driven boom, in the first weeks of this year, as inflation rose to historic heights and the Federal Reserve signaled an increase in benchmark interest rates. However, this is expected to be a boon for the market’s long-term health. Analysts have argued that a shift in investor sentiment could be a precursor to a healthy long-term cycle.
Last Thursday, the stock market staged a striking comeback due to a sharp rebound in tech stocks, which had retreated to 11-month lows, amid the Russia-Ukraine conflict, as the Biden administration announced export restrictions against Russia but did not ban the country’s use of the SWIFT International Payment system, seemingly giving rest to investor concerns.
NVIDIA Corporation (NVDA)
NVDA in Santa Clara, Calif., is a visual computing company that operates worldwide under Graphics and Compute & Networking segments. The company offers GeForce GPUs for gaming and PCS, GeForce NOW Gaming Streaming devices, and Data Center platforms and systems for AI. It has a market capitalization of $582.88 billion.
On February 16, Jaguar Land Rover announced the formation of a multi-year strategic partnership with NVDA to jointly develop and deliver next-generation automated driving systems and AI-enabled services and experiences for its customers. NVDA should stand to benefit from this partnership.
On January 4, NVDA unveiled more than 160 gaming and Studio GeForce®-based laptop designs, as well as a new desktop and laptop GeForce RTX® GPUs and technologies. The new products and designs might add to the company’s revenue stream.
For the fiscal fourth quarter, ended January 30, NVDA’s revenue increased 52.8% year-over-year to $7.64 billion. Its non-GAAP income from operations rose 76% from the prior-year quarter to $3.68 billion. Its non-GAAP net income and non-GAAP net income per share improved 71.2% and 69.2% from the same period last year to $3.35 billion and $1.32, respectively.
Analysts expect NVDA’s EPS to increase 41.8% year-over-year to $1.29 for its fiscal quarter ending April 30, 2022, while the Street expects its revenue to rise 43.3% from the prior-year period to $8.11 billion for the same period. Moreover, NVDA has an impressive surprise earnings history; it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 69.6% in price over the past year but declined 20.2% year-to-date to close yesterday’s trading session at $234.77.
Among the 22 Wall Street analysts rating NVDA, 19 have rated it Buy, while three have rated it Hold. The $362.22, 12-month median price target indicates a 54.3% potential upside. The price targets range from a low of $250.00 to a high of $400.00.
RingCentral, Inc. (RNG)
San Mateo, Calif.-based RNG operates as a Software-as-a-Service solutions provider that enables a business to communicate, collaborate, and connect. The company’s product offerings include RingCentral Office, a communication and collaboration provider across various modes, and RingCentral Contact Center, a collaborative contact center solution.
On March 1, RNG introduced two new products to meet the current and evolving demands in education. The RingCentral Education Essentials™ and RingCentral Education Standard™ offerings are designed to provide flexible solutions for virtual or hybrid classrooms or campus. Both solutions are expected to be available by the end of March and might add to the company’s revenue stream.
On February 17, Deutsche Telekom, a national network and service provider in Germany and RNG, announced the expansion of their partnership to offer customers an end-to-end communication and collaboration solution called RingCentral X powered by Telekom. The solution should stand to benefit RNG by leveraging Deutsche Telekom’s high-quality access products and strong brand presence.
RNG’s total revenues increased 34.1% year-over-year to $448.50 million in its fiscal fourth quarter, ended December 31. Its gross profit rose 28.4% from the prior-year quarter to $312.48 million. Its non-GAAP net income and non-GAAP net income per share came in at $36.64 million and $0.39, respectively, up 37.2% and 34.5% from the prior-year period.
The $0.34 consensus EPS estimate for the quarter ending March 31, 2022, indicates a 25.9% year-over-year increase. And the $458.67 million consensus revenue estimate for the same period reflects an improvement of 34.9% from the prior-year quarter. In addition, RNG has topped consensus EPS estimates in each of the trailing four quarters.
The stock has declined 32.8% in price year-to-date but has gained 1.3% over the past five days to close yesterday’s trading session at $125.83.
Of the 24 analysts rating RNG, 21 have rated the stock Buy, while three have rated it Hold. The 12-month median price target of $236.14 indicates an 87.7% potential upside. The price targets range from a low of $165.00 to a high of $300.00.
Wix.com Ltd. (WIX)
WIX, headquartered in Tel Aviv, Israel, is a developer and marketer of a cloud-based platform that empowers anyone to create a website or web application internationally. The company’s offerings include Wix Editor, Wix ADI, Corvid by Wix, Ascend by Wix, and Wix Logo Maker.
On February 10, Yellow Pages Limited, a Canadian digital media and marketing company, announced that it has entered a strategic partnership with WIX to strengthen its website offering. On January 13, Deepcrawl, a technical SEO and website health SaaS platform, and WIX announced a partnership for enabling users to harness Deepcrawl’s SEO technology on the WIX platform. Both the partnerships might prove to be beneficial for the company.
And on December 1, PayPal Holdings Inc. (PYPL) announced that WIX merchants could offer PYPL’s PayPal Credit and PayPal Pay in 4 services. Amit Sagiv, Co-head of Payments at WIX, said, “By continuing to offer flexible payment methods to our merchants like PayPal Credit and PayPal Pay in 4, we’re helping merchants reach more customers by providing them with more options at checkout and ultimately increasing their conversion.”
For its fiscal fourth quarter, ended December 31, WIX’s revenue increased 16.2% year-over-year to $328.34 million. This can be attributed to a 15.4% rise from the prior-year quarter in creative subscriptions revenue to $246.67 million. Its gross profit improved 11.3% from the same period in the prior year to $199.54 million.
The Street’s EPS estimate for fiscal 2023 indicates a 62.1% year-over-year increase, while its $1.72 billion revenue estimate for the same year reflects a 17.2% year-over-year increase. WIX has beaten consensus EPS estimates in each of the trailing four quarters.
WIX’s shares have declined 45.7% in price year-to-date to close yesterday’s trading session at $85.71. It has gained 5.1% in price over the past five days.
Among the 15 Wall Street analysts rating WIX, 10 have rated it Buy, while five have rated it Hold. The 12-month median price target of $137.50 indicates a 60.4% potential upside. The price targets range from a low of $85.00 to a high of $250.00.
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NVDA shares were trading at $243.35 per share on Wednesday afternoon, up $8.58 (+3.65%). Year-to-date, NVDA has declined -17.26%, versus a -7.71% 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...
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