The omicron variant was first identified by scientists in South Africa last week. Since then, several other countries have confirmed cases of the new strain, with few other reporting suspected cases. Consequently, several countries have begun imposing fresh travel restrictions.
Scientists fear that the omnicron strain could be more transmissible and have higher resistance to vaccines. Due to the omicron threat, people may again prefer to stay indoors, and companies may return to remote working. As a result, the demand for digital platforms and solutions could increase.
Given this backdrop, we think it could be worth betting on stay-at-home stocks Zoom Video Communications, Inc. (ZM), Twilio Inc. (TWLO), CrowdStrike Holdings, Inc. (CRWD), and DocuSign, Inc. (DOCU). Wall Street analysts expect these stocks to witness a solid upside in the near term.
Zoom Video Communications, Inc. (ZM)
Incorporated in 2011, ZM is a video communication platform that connects large enterprises, small businesses, and individuals in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The San Diego, Calif.-based company’s core products include Zoom Meetings, Zoom Conference Room Connector, Zoom Developer Platform, Zoom App Marketplace, and other Zoom products.
In September, ZM unveiled innovative plans for a dynamic working environment by transforming and advancing the business and personal communications trajectory. ZM is also developing new products, features, and partnerships to empower and engage the modern workforce with connected workstreams. The company believes that with these transformations, ZM should be able to provide opportunities for live transcription and translation services powered by artificial intelligence (AI) to its customers.
ZM’s revenue for the fiscal third quarter, ended October 31, 2021, increased 35.2% year-over-year to $1.05 billion. The company’s gross profit grew 50.4% from its year-ago value to $779.8 million. Its income from operations rose 51.3% from the prior-year quarter to $290.86 million. And the company’s net income increased 71.4% year-over-year to $340.38 million.
Analysts expect ZM’s revenue to increase 53.7% year-over-year to $4.07 billion in its fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to grow 45.2% in the current year. The stock has surged 5.1% in price over the past five trading days.
Closing the last trading session at $218.98, the $310.44 average analyst price target represents a 41.8% potential upside.
Twilio Inc. (TWLO)
San Francisco-based TWLO is a cloud communications platform that enables developers to build, scale and operate real-time communications within software applications. The company’s products include a set of APIs that enable embedding voice, messaging, video, and email capabilities into applications. TWLO also offers a customer engagement platform, and its Super Network allows its customers’ software to communicate with connected devices globally.
Last month, TWLO launched Twilio Engage in Twilio’s Customer Engagement Platform (CEP), a first-of-its-kind growth automation platform that should help marketers deliver exceptional omnichannel campaigns fit for the digital era. The company believes that Twilio Engage will personalize interactions across the entire customer journey and improve conversion, retention, and customer experiences.
During the third quarter, ended September 30, 2021, TWLO’s revenue increased 65.2% year-over-year to $740.18 million. The company’s gross profit grew 57.9% from its year-ago value to $364.62 million. Its cash and cash equivalents rose 60.4% to $1.5 billion for the nine months ended September 30, 2021.
TWLO’s revenue is expected to increase 57.1% year-over-year to $2.77 billion in its fiscal 2021. The company has surpassed the consensus EPS in each of the trailing four quarters. Its EPS is expected to grow 88.9% next year. The stock has gained 3.3% in price over the past five trading days.
A $426.25 consensus price target represents a 45.4% potential gain from its last closing price of $293.23.
CrowdStrike Holdings, Inc. (CRWD)
Incorporated in 2011, Sunnyvale, Calif.-based CRWD provides cloud-delivered solutions for endpoint and cloud workload protection in the United States, Australia, Germany, India, Israel, Romania, and the U.K. The company’s cloud modules include Falcon Horizon, Falcon Prevent, Falcon Device Control, Falcon Firewall Management, Falcon Spotlight, and others. CRWD also offers information technology (IT) hygiene, vulnerability management, and threat intelligence.
This month, CRWD was selected by the Center for Internet Security (CIS) as the premier partner for endpoint security. Through this expanded partnership, CRWD can engage CIS’ fully managed 24/7/365 services with CRWD’s endpoint and workload protection capabilities to provide state, local, tribal, and territorial governments the cyber protection they need.
CRWD’s total revenue increased 69.7% year-over-year to $337.69 million for the fiscal second quarter ended July 31, 2021. The company’s gross profit grew 71% from its year-ago value to $247.26 million. And its cash and cash equivalents came in at $1.79 billion for the period.
Analysts expect CRWD’s revenue to increase 60.8% year-over-year to $1.41 billion for the fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Its EPS is expected to grow 74.1% in the current year. Moreover, the stock has gained 48.9% in price over the past year.
Closing its last trading session at $224.57, the average analyst price target of $313.53 represents a 39.6% potential upside.
DocuSign, Inc. (DOCU)
DOCU is a cloud-based software in the United States that provides an e-signature solution to enable businesses to prepare, sign and manage agreements digitally. The San Francisco-based company’s products include DocuSign eSignature, DocuSign CLM, DocuSign Insight, and some additional products, including DocuSign Payments, DocuSign Analyzer, and others.
Last month, DOCU and Salesforce expanded their global strategic partnership to build new joint solutions that make it easier for customers to accelerate how agreements are facilitated worldwide. Through this partnership, both companies should enable customers to streamline business contract workflows, reduce costs and increase productivity.
DOCU’s total revenue for its fiscal second quarter, ended July 31, 2021, increased 49.6% year-over-year to $511.84 million. The company’s gross profit grew 58.2% from its year-ago value to $398.06 million. Its loss from operations decreased 61.4% from the prior-year quarter to $22.61 million. Also, the company’s net loss declined 60.5% year-over-year to $25.5 million.
DOCU’s revenue is expected to increase 43.6% year-over-year to $2.09 billion for its fiscal year 2022. The company has surpassed the consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to grow 88.9% in the current year. The stock has surged 24.7% in price over the past six months.
A $336.36 consensus price target represents a 33.7% potential gain from the last closing price of $251.5.
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ZM shares were trading at $208.74 per share on Tuesday afternoon, down $10.24 (-4.68%). Year-to-date, ZM has declined -38.12%, versus a 23.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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