For Immediate Release
Chicago, IL – April 17, 2020 – Zacks Equity Research Shares of Zoom Video ZM as the Bull of the Day, Capri Holdings CPRI asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Teladoc Health, Inc. TDOC, Allscripts Healthcare Solutions, Inc. MDRX and Masimo Corporation MASI.
Here is a synopsis of all five stocks:
Bull of the Day:
Zoom Video shares have skyrocketed in 2020 as millions of people flock to its video conferencing platform amid the coronavirus stay-at-home push. Zoom’s overnight expansion has created some privacy problems, but the stock has bounced back already since the concerns popped up.
Zoom offers businesses, schools, consumers, and really anyone who has a use for it, the ability to connect via video, voice, chat, and content sharing. The San Jose, California-based firm went public in April 2019 and boasts that its cloud-native platform can connect “thousands of people in a single meeting across disparate devices and locations.”
Even before the coronavirus pandemic forced people around the world to stay at home and work remotely—if they can—Zoom’s offerings were highly attractive in today’s digitally and globally connected society. Zoom allows businesses to cut down on travel costs and to meet with different office locations or remote staff.
ZM’s platform has proliferated during the coronavirus. And companies that find the current remote environment relativity seamless might cut back on rent and commercial real estate expenses by trimming in-office staff or allowing for more flexible stay-at-home schedules when we come out of this current mess.
On top of that, millions of people have started to use Zoom to communicate with family and friends. In fact, “Zooming” or “let’s Zoom” have already become part of the many people’s vocabulary during the pandemic. Clearly, there are no guarantees that once the stay-at-home measures are lifted this will remain the case, but it might encourage more people to connect with people they don’t live near more often.
Recent Results & Expansion
Back on March 4, Zoom wowed Wall Street with its Q4 fiscal 2020 financial results. The firm’s fourth quarter revenue surged 78%, with fiscal-year sales up 88% to $622.7 million. ZM’s adjusted quarterly earnings of $0.15 a share also destroyed our $0.08 Zacks estimate.
Zoom also closed the year with roughly 82,000 customers with more than 10 employees, up 61% from a year ago. And these results hardly factor in the coronavirus at all.
In fact, Zoom’s usage has “ballooned overnight,” according to founder and CEO Eric Yuan’s April 1 blog post. He noted that “the maximum number of daily meeting participants, both free and paid, conducted on Zoom was approximately 10 million,” as of the end of December last year. This figure then soared to “more than 200 million daily meeting participants, both free and paid,” in March.
This surge in users and usage has highlighted security concerns, including what has become known as Zoombombing, where people crash Zoom chats. “We recognize that we have fallen short of the community’s – and our own – privacy and security expectations,” Yuan wrote.
Zoom’s recent issues have brought about some legal scrutiny, including from the New York attorney general’s office. The video-conferencing firm has also been hit with a class action lawsuit by one of its shareholders over its privacy and security issues.
Zoom is currently working to address its privacy concerns and its stock price has already surged 30% since April 7, after it slipped when its security came under scrutiny.
This recent jump is part of a roughly 120% expansion in 2020, which crushes the S&P 500’s 14% decline and easily tops fellow stay-at-home stocks such as Netflix and Slack, up 36% and 32%, respectively.
ZM has also blown away fellow 2019 IPO standouts Uber and Lyft. Despite the climb, Zoom stock closed regular trading Thursday at $150.26 a share, down roughly 9% from its 52-week intraday highs. This could give it more room to run.
Moving on, our current Zacks estimates call for ZM’s Q1 sales to jump over 65%, with fiscal 2021 revenue projected to surge another 48% higher to reach $922.7 million—this would come on top of last year’s 88% top-line expansion.
Zoom’s adjusted Q1 earnings are projected to soar 233% to $0.10 a share. Meanwhile, its full-year EPS figures are projected to jump 20% and 35%, respectively in FY21 and FY22.
The firm’s earnings revision activity has also popped since it posted its Q4 results, with its first quarter consensus estimate up 67% and its fiscal 2021 figure up 56%. Plus, Zoom has topped our bottom-line estimate by an average of 340% in the trailing three quarters.
ZM’s strong earnings revisions help it earn a Zacks Rank #1 (Strong Buy) at the moment. Zoom does face competition from giants such as Microsoft, and Verizon reportedly just agreed to buy video conferencing company Blue Jeans Network Inc.
That said, Zoom seems poised to grow as part of our digitally connected world, from business and beyond. And the coronavirus might reshape how people communicate, especially in the near-term. Investors should also note that Zoom’s balance sheet is solid.
ZM’s full fiscal year operating cash flow jumped 196% to $151.9 million. Meanwhile, it closed the year with $855 million in cash, equivalents, and marketable securities, against $334 in current liabilities and $65 million in long-term debt.
Bear of the Day:
Capri Holdings shares have tumbled nearly 70% in 2020. The global luxury fashion firm has fallen victim to the coronavirus economic downturn and its near-term outlook has deteriorated.
Capri owns Michael Kors, Jimmy Choo, and Versace. The company used to be called Michael Kors Holdings Ltd. until it officially closed its deal to buy high-end giant Versace at the end of 2018. The company hoped the deal would help expand its global reach and boost its exposure in fast-growing Asian markets.
Investors didn’t react that kindly to the deal at the time and now the coronavirus has shutdown many non-essential businesses around the world. And Capri announced on Monday, April 6 that it would furlough all its 7,000 retail store employees in North America amid the coronavirus pandemic.
Capri now anticipates that its retail stores in North America and Europe will be closed until approximately June 1, “and will only reopen once it is deemed safe to do so.” Capri also stated in the same press release that it “is diligently managing inventory purchases in light of the store closures in North America and EMEA and the anticipated decreased demand in the second half of the fiscal year by reducing or canceling commitments, redeploying inventory and consolidating upcoming seasons.”
On Wednesday, the Commerce Department said that U.S. retail sales fell 8.7% in March. This represented the largest month-over-month decline since the records began in 1992. More specifically, sales at clothing stores tumbled by more than 50%.
Capri is in a tough spot because even if world economies start to open up sooner than later, the rollout will likely be slow. And it’s hard to think that luxury fashion will be at the top of the list of companies that will open their doors first.
That said, our current Zacks estimates call for Capri’s current-quarter sales to sink over 7%. Meanwhile, its adjusted quarterly earnings are projected to fall roughly 21% to $0.50 a share.
Capri’s earnings revisions trends have slipped recently, with its current-quarter outlook down 33%. These negative earnings trends help Capri hold a Zacks Rank #5 (Strong Sell) right now. The stock is also part of an industry that rests in the bottom 18% of our more than 250 Zacks industries.
CPRI stock fell over 8% during regular trading on Thursday to $12.24 a share. The stock is now down over 75% in the last 12 months and eventually some investors might want to scoop up the beatdown luxury fashion company. But until there are some signs that its stores will be able to reopen sometime soon, it is likely best to stay away.
Coronavirus Puts Digital Health in Focus: 3 Stocks to Watch
The coronavirus pandemic, which has been ravaging the world over the past three months, has literally brought the global economy to a standstill. Recently WHO reported that the virus is 10 times more deadly than 2009’s swine flu pandemic, which justifies the growing unease around the world.
Governments worldwide are grappling to deal with this biological catastrophe, which has resulted in a financial meltdown owing to sector-wide shutdowns, production stoppages, job loss and reduction in purchasing capacity. This crisis has hit the U.S. economy hard, leaving investors with the tough job of assessing the impact and aftermath of this financial fallout.
With the number of COVID-19 cases rising with each passing day, the medical community and the first responders across the United States are still struggling to treat the huge number of infected patients while staying safe themselves. Overcrowding at the hospitals, shortage of critical medical gear and more importantly, fear and panic, have intensified the crisis all the more.
In order to tackle such level of a crisis, digital health has come into play as it is crucial in the process of flattening the curve, limiting the spread of the virus and assisting in the treatment of infected individuals. In the last couple of months, as the crisis intensified, the medical community has turned to digital health for help. Let’s delve deeper.
Digital Health to the Rescue
Let us first discuss about telemedicine (also referred to as telehealth or e-health) has been playing a crucial part in the battle against the pandemic. To put it simply, telemedicine enables health care professionals to evaluate, diagnose and treat patients in remote locations through the use of telecommunications technology. In fact, the telemedicine stocks got an impressive response, when in February, the Centers for Disease Control and Prevention asked healthcare service communities to increase the use of telemedicine in broader ways. In this regard, UnitedHealth, which already has several telehealth services, including free apps through which virtual consultations can be booked, is a name worth mentioning.
Now let’s turn our attention to artificial intelligence (AI), which has been helping in the detection of the spread of the virus. Notably, AI has been implemented in hospitals in the United States to help medical professionals screen visitors and treat infected patients. Hospitals having access to digital health technology can monitor and deal with the pandemic more efficiently.
In fact, PRA Health Sciences recently launched the COVID-19 Monitoring Program, which will allow individuals to connect with a healthcare professional without leaving home and thus, maintaining social distancing. Notably, the COVID-19 Monitoring Program is a mobile-app driven, tiered initiative that will enable employers, payers, providers and health systems to track health and wellbeing of individuals who might have been exposed, asymptomatic or diagnosed with COVID-19.
Remote patient monitoring, which is another form of AI technology, has been helping in carefully monitoring patients while assuring protection for the healthcare workers. Remote patient is a method of healthcare delivery that utilizes the latest advances in information technology to collect patient data outside of traditional healthcare settings. In view of COVID-19 crisis, FDA has already green-lit the expanded use of remote patient monitoring technologies to reduce hospital visits, thereby minimizing the risk of exposure to the virus and lowering the burden on providers.
Medical robots, a game changer in a viral outbreak of this level, have been helping physicians to communicate with a patient through a screen and are also equipped with a stethoscope that enables doctors take the patients’ vitals. This, in turn, minimizes the risk of infection among the medical staff.
Genome sequencing can prove to be extremely valuable in such an uncertain and trying time. With evolving technology, scientists will be able to sequence pathogens’ genome quicker and the rate of discovering adequate therapies will also accelerate, thereby saving more lives in the process.
Stocks Focusing on Digital Health
Going by the aforementioned discussion, the investors might want to look into the following three stocks that have stepped up to provide support to the medical community during this crisis.
Teladoc Health, Inc.: Teladoc has setup an interactive arrangement that allows patients to talk to a U.S. board-certified physician by phone or video, in a bid to counter this crisis. Further, it is currently enabling health systems to provide virtual care on a greater scale through the technology and capabilities of both Teladoc Health, and its newly-acquired InTouch Health platform. The company carries a Zacks Rank of 3 (Hold).
In the past two months, the company has gained 52.4%, against the industry’s decline of 22.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Allscripts Healthcare Solutions, Inc. offers information technology (IT) solutions and services to healthcare organizations. The company’s clients across the nation have recently signed up to rapidly facilitate telehealth visit capabilities to their patients.
Notably, the company provides simplified telehealth implementation to health systems through its electronic health record (EHR)-agnostic patient engagement platform known as FollowMyHealth. This service can prove crucial to efforts in curbing the spread of the coronavirus pandemic. For investors’ notice, FollowMyHealth is a mobile-first, enterprise patient engagement solution for providers, hospitals and health systems.
In the past two months, the Zacks Rank #3 stock has lost 18% compared with the industry’s decline of 19.9%.
Masimo Corporation develops, manufactures and markets a family of non-invasive monitoring systems. The company recently announced the full market release of Masimo SafetyNet, which is an economically scalable cloud-based patient management solution, created to enable clinicians to provide care for patients in hospital settings and non-traditional settings remotely. This innovative solution is now available globally and is likely to aid clinicians and health workers in fighting the global COVID-19 pandemic. The company sports a Zacks Rank of 1.
In the past two months, the company has gained 3.8%, against the industry’s decline of 14%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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Allscripts Healthcare Solutions, Inc. (MDRX) : Free Stock Analysis Report
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