The Consumer Price Index rose 6.2% in October from a year earlier—its biggest jump in more than 30 years—dragging the benchmarked stock indexes down earlier this week. However, the tech-heavy NASDAQ soon rebounded and rose 0.7% yesterday as investors bought the dip. Investors’ interest in the tech stocks is evident in the Technology Select Sector SPDR Fund’s (XLK) 9.4% gains over the past month.
The tech industry is expected to grow in the foreseeable future due to the increasing applications of tech solutions across several sectors and the continuing remote working trend. Wedbush analyst Dan Ives said, “We continue to believe this pressure on the tech sector is short-lived with our belief that tech stocks will be up 10% into year-end as the tech growth stories are being massively underestimated by the Street with 3Q earnings a major positive catalyst for the tech sector.”
PTC Inc. (PTC)
Software and services company PTC enables industrial companies to digitally transform product and service creation, operational excellence, and workforce productivity. Its portfolio consists of CAD, PLM, IoT, and AR technologies delivered on-prem, hybrid, and SaaS. PTC is headquartered in Needham, Mass.
On October 28, 2021, PTC announced the availability of the ThingWorx Digital Performance Management Solution. This first-of-its-kind offering is a significant advancement in manufacturing companies’ ability to drive efficiency. The President and CEO of PTC, Jim Heppelmann, said, “This software marks the beginning of a new phase in PTC’s IIoT growth strategy as we evolve our positioning of ThingWorx as a suite of powerful enterprise solutions that power significant enterprise efficiency to drive business value.”
For its fourth fiscal quarter, ended September 30, 2021, PTC’s revenues increased 23% year-over-year to $481 million. The company’s annual recurring revenue (ARR) increased 16% year-over-year to $1.47 billion. Its cash flow from operations increased 32.3% year-over-year to $45 million, and its non-GAAP EPS increased 41% year-over-year to $1.10.
Analysts expect PTC’s EPS and revenues for its fiscal 2023 to increase 14.5% and 9.7%, respectively, year-over-year to $5.04 and $2.13 billion. It has surpassed consensus EPS estimates in each of the trailing four quarters. The stock has gained 25.7% in price over the past year to close yesterday’s trading session at $119.79.
PTC’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
PTC has a B grade for Growth, Sentiment, and Quality. It is ranked #12 in the 162-stock Software-Application industry. Click here to see the additional ratings for PTC (Value, Momentum, and Stability).
Open Text Corporation (OTEX)
Headquartered in Waterloo, Canada, OTEX is a world leader in Information Management. It helps companies securely capture, govern and exchange information on a global scale. OTEX solves digital business challenges for customers, ranging from small- and mid-sized businesses to the world’s most prominent organizations with complex structures.
On November 8, 2021, OTEX announced that it had agreed to acquire Zix Corporation (ZIXI). The CEO and CTO of OTEX, Mark J. Barrenechea, said, “Zix will deepen our technology and go-to-market relationship with Microsoft. Further, Zix will bring approximately 5,600 MSPs to OpenText and create significant cross-sell opportunities in the OpenText and Zix clouds. Today’s announcement demonstrates our commitment to winning in both the Enterprise and SMB markets.”
OTEX’s revenues increased 3.5% year-over-year to $832.30 million for its fiscal first quarter, ended September 30, 2021. The company’s ARR increased 3.2% year-over-year to $691.80 million. Also, its net income increased 27.6% from the same period last year to $131.90 million.
For its fiscal year 2023, analysts expect OTEX’s EPS and revenues to increase 4% and 2.5%, respectively, year-over-year to $4.44 and $4.41 billion. Over the past year, the stock has gained 22.2% in price to close yesterday’s trading session at $51.27.
OTEX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. It has a B grade for Growth, Value, Stability, Sentiment, and Quality.
It is ranked #1 of 162 stocks in the Software-Application industry. Click here to see OTEX’s rating for Momentum.
F5 Networks, Inc. (FFIV)
FFIV, in Seattle, Wash., provides multi-cloud application services for the security, performance, and availability of network applications, servers, and storage systems. Its multi-cloud application services enable its customers to develop, deploy, operate, secure, and govern applications in any architecture, from on-premises to the public cloud.
On October 4, 2021, FFIV announced its acquisition of Threat Stack’s, a cloud security and workload protection leader. The acquisition is expected to add cloud security capabilities to FFIV’s application and API protection solutions, enhancing visibility across application infrastructure and workloads to deliver more actionable security insights to customers.
For its fourth fiscal quarter, ended September 30, 2021, FFIV’s non-GAAP revenues increased 10.5% year-over-year to $682 million. Its non-GAAP gross profit increased 9.6% year-over-year to $570.68 million. Also, its non-GAAP net income increased 23.8% year-over-year to $185.24 million, while its non-GAAP EPS came in at $3.01, up 23.9% year-over-year.
Analysts expect FFIV’s EPS for its fiscal 2023 to increase 12.9% year-over-year to $13.19. Its revenues for its fiscal 2022 are expected to increase 8.3% year-over-year to $2.82 billion. It has surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 41.2% in price over the past year to close yesterday’s trading session at $225.43.
FFIV’s POWR Ratings reflect solid prospects. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It has an A grade for Quality and a B grade for Value and Stability.
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PTC shares were unchanged in premarket trading Friday. Year-to-date, PTC has gained 0.15%, versus a 25.58% 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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