Software stocks plunged amid the current tech rout, driven by the Fed’s tighter monetary policy and an economic slowdown. The tech-heavy Nasdaq Composite index has declined 23.3% year-to-date.
However, the recent technology-sector meltdown has created enormous buying opportunities, with fundamentally-sound tech stocks trading at impressive discounts. The growing use of 5G wireless networks, cloud computing, AI, self-driving vehicles, hybrid architecture, and IoT should drive the industry’s growth over the long term.
Therefore, Wall Street analysts predict beaten-down software stocks MicroStrategy Incorporated (MSTR), Asana, Inc. (ASAN), Qualtrics International Inc. (XM), Weave Communications, Inc. (WEAV), and Domo, Inc. (DOMO) will soar in price in the near term.
Click here to check out our Software Industry Report for 2022
MicroStrategy Incorporated (MSTR)
MSTR is an analytics and business intelligence company that designs, develops, markets, and sells its software platform through licensing arrangements, cloud subscriptions, and related services. The Tysons Corner, Va.-based company’s core product offering is its MicroStrategy platform.
On March 1, Toyota Astra Motor partnered with MSTR to drive market leadership. Michael J. Saylor, CEO of MicroStrategy, said, “We had an increase in Cloud revenue and billings, with growing adoption of the MicroStrategy platform by new and existing customers.”
MSTR’s cash and cash equivalents increased 46.3% from the prior-year quarter to $92.68 million in its fiscal quarter ended March 31, 2022. Its operating expenses for the quarter came in at $263.60 million, reflecting a 7% decrease year-over-year.
The Street expects the company’s EPS to increase 99.5% year-over-year in its fiscal second quarter (ending June 30, 2022). The $532.11 million consensus revenue estimate for its fiscal 2023 (ending Dec. 31, 2023) represents a 5.1% improvement year-over-year.
The stock has slumped 61.8% in price over the past six months to close yesterday’s trading session at $240.00.
Among four analysts that rated MSTR, three rated it Buy, while one rated it Hold. The 12-month median price target of $539.33 indicates a 129.1% potential upside from its last closing price of $235.44. The price targets range from a low of $215.00 to a high of $950.00.
Asana, Inc. (ASAN)
San Francisco-based ASAN offers a work management platform that enables teams to orchestrate work, from daily tasks to cross-functional strategic initiatives, and manage product launches, marketing campaigns, and organization-wide goal settings. It serves customers in technology, retail, education, non-profit, government, healthcare, media, and financial services industries.
On May 23, ASAN partnered with Align Technology, a leading global medical device company, to bring New Work management solutions to Invisalign-trained dental and orthodontic practices in the U.S. This new solution is expected to improve patient care for its customers.
ASAN’s revenue has increased 57% year-over-year to $120.64 million in its fiscal 2023 first quarter, ended April 30, 2022, while its gross profit grew 57.4% from its year-ago value to $108.21 million.
The 127.61 million consensus revenue estimate for its fiscal second quarter (ending July 31, 2022) represents a 42.6% improvement year-over-year. The Street expects the company’s EPS to increase 19.2% year-over-year in fiscal 2024 (ending Jan. 31, 2024).
ASAN stock slumped 69.6% in price year-to-date to close the last trading session at $22.68.
Among the 12 Wall Street analysts that rated ASAN, eight rated it Buy, three rated it Hold, and one rated it Sell. The 12-month median price target of $43.67 indicates a 92.3% potential upside from its last closing price of $22.71. The price targets range from a low of $21.00 to a high of $88.00.
Qualtrics International Inc. (XM)
XM in Provo, Utah, provides an experienced management (XM) platform to manage customer, employee, brand, and product experiences. Its Qualtrics XM Platform is a system of action that guides users with specific instructions for improvement and automated actions to improve experiences.
On November 15, XM partnered with Amazon Web Services to enhance operational performance, scale globally, and deliver actionable stakeholder insights faster. This collaboration should aid the company in delivering enhanced customer experiences.
XM’s total revenue increased 41% year-over-year to $335.65 million in its fiscal first quarter, ended March 31, 2022. The company’s gross profit came in at $236.38 million, reflecting a 33.7% rise from the prior-year quarter.
Analysts expect XM’s revenue to increase 32.9% year-over-year to $1.43 billion in its fiscal year 2022 (ending Dec.31, 2022). The consensus EPS estimate for the current year indicates a 200% improvement to $0.01 from the same period last year.
The stock slumped 58.1% in price year-to-date to close the last trading session at $14.85.
Also, the 12-month median price target of $36.08 indicates a 142.6% potential upside from the last closing price of $14.85. The price targets range from a low of $28.00 to a high of $46.00. Among the 13 Wall Street analysts that rated XM, 11 rated it Buy, while two rated it Hold.
Weave Communications, Inc. (WEAV)
Lehi, Utah-based WEAV provides a customer communications and engagement software platform for small- and medium-sized businesses. It offers an all-in-one platform that spans all forms of communications and customer engagement, ranging from answering phones, scheduling appointments, sending text reminders to requesting client reviews, collecting payments, and sending email marketing campaigns.
On April 26, WEAV partnered with Provet Cloud as its key communication partner to empower veterinary professionals. Analysts expect this collaboration to boost growth opportunities for both companies.
On June 2, the company was recognized with the Dental Product Shopper Reader’s Choice award as a go-to solution for patient communication for the second consecutive year. On May 12, WEAV was also named as best healthcare technology solution finalist for the SIIA CODiE Awards. This reflects the company’s impactful products and services.
WEAV’s total revenue increased 30% year-over-year to $33.3 million in its fiscal first quarter (ended March 31, 2022). Its gross profit grew 31.3% from its year-ago value to $19.52 million. As of March 31, 2022, the company had $128.90 million in cash and cash equivalents.
The consensus revenue estimate of $35.61 million for the fiscal third quarter (ending Sept.30, 2022) indicates a 17.5% improvement year-over-year. The consensus EPS estimate for the next quarter represents an 80.2% increase from the same period last year.
Shares of WEAV slumped 72.3% in price over the past year to close the last trading session at $5.20.
Among three Wall Street analysts that rated WEAV, two rated it Buy, while one rated it Hold. The 12-month median price target of $10.00 indicates a 92.3% potential upside from the last closing price of $5.20. The price targets range from a low of $8.00 to a high of $12.00.
Domo, Inc. (DOMO)
DOMO in American Fork, Utah, operates a cloud-based business intelligence platform. It provides real-time access to quantitative and qualitative data and insights and allows its users to manage businesses from smartphones. It also provides users with a Web-based toolkit, Connector Dev Studio, which allows users to build their own connectors.
On April 12, DOMO was named the #1 vendor in the Dresner Advisory Services’ 2022 cloud computing and BI market study for the sixth consecutive year. This highlights that the company’s cloud BI has robust demand in the market.
On March 23, the company launched a data app to bring the benefits of data-driven decisions and actions to those who are underserved by traditional business intelligence (BI) and analytics. Data apps designed to deliver business value at record speed and scale should enable the organizations to use data effectively.
For its fiscal first quarter ended April 30, 2022, DOMO’s total revenues increased 24% year-over-year to $74.46 million. Its gross profit grew 26.5% from its year-ago value to $56.80 million. And its cash and cash equivalents increased marginally year-over-year to $84 million as of April 30, 2022.
Analysts expect DOMO’s EPS to increase 0.8% year-over-year in its fiscal 2023 (ending Jan. 31, 2023). The $316.30 million consensus revenue estimate for the current year represents a 22.6% increase from the same period last year.
The stock slumped 54.2% in price over the past year to close the last trading session at $32.
DOMO is expected to hit $73.00 soon, reflecting a 128.1% potential upside from the last closing price of $32.00. The price targets range from a low of $59.00 to a high of $90.00. Among three Wall Street analysts that rated DOMO, each rated it Buy.
Click here to check out our Software Industry Report for 2022
MSTR shares were trading at $235.09 per share on Wednesday afternoon, down $4.91 (-2.05%). Year-to-date, MSTR has declined -56.82%, versus a -12.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
5 Beaten-Down Software Stocks That Will Double, According to Wall Street StockNews.com
