Is Now a Good Time to Scoop Up Shares of Beaten-Down Work-From-Home Stocks Zoom Video, Docusign, and Twilio?

Tech stocks have been the worst affected in the Fed’s hawkish tilt and the ongoing market sell-off. This is evidenced by the tech-heavy Nasdaq 100 index’s 14.7% decline year-to-date. Remote working stocks, which were hailed as pandemic-winners in early 2020, have plunged in price  lately.

However, the popularity of remote working has remained steady, particularly amid the resurgence of COVID-19. It has become the new normal for many businesses because it lowered their operational costs and improved employee productivity. Despite the success of vaccinations and the removal of public-health-driving restrictions, remote working is likely to remain in place due to its various benefits. According to a survey by Gartner, 44% of companies have pushed back or altered their reopening plans owing to the surge in COVID-19 omicron cases.

Given this backdrop, we think it could be wise to add quality work-from-home stocks Zoom Video Communications, Inc. (ZM), Twilio Inc. (TWLO), and DocuSign, Inc. (DOCU). These stocks are down significantly from their highs, and Wall Street analysts expect them to gain in the near term.

Zoom Video Communications, Inc. (ZM)

ZM provides a video communication platform that connects people through video, phone, chat, and content sharing and enables face-to-face video experiences. The San Diego, Calif.-based company’s core products include Zoom Meetings, Zoom Phone, Zoom Chat, Zoom Rooms, Zoom Conference Room Connector, Zoom Video Webinars, Zoom Developer Platform, and Zoom App Marketplace.

On Jan.10, 2022, ZM announced that the Zoom Meeting Client version 5.6.6 became the first video communications client to attain certification for Common Criteria Evaluation Assurance Level 2 (v3.1 rev. 5), issued by the German Federal Office for Information Security (BSI). The Common Criteria is an international standard for evaluating if an IT product satisfies a defined set of security requirements.

ZM’s revenue for its fiscal third quarter, ended Oct. 31, 2021, increased 35% year-over-year to $1.05 billion. The company’s non-GAAP income from operations increased 41.4% year-over-year to $411.27 million. And  its non-GAAP net income increased 13.8% year-over-year to $338.38 million.

Analysts expect ZM’s EPS and revenue for fiscal 2022 to increase 45.8% and 54%, respectively, year-over-year to $4.87 and $4.08 billion. It has surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has lost 63.1% to close its last trading session at $136.81. However, Wall Street analysts expect the stock to hit $280.19 in the near term, indicating a potential 104.8% upside.

Twilio Inc. (TWLO)

San Francisco-based TWLO provides a cloud communications platform that enables developers to build, scale and operate real-time communications within software applications. The company offers a customer engagement platform with software designed to address specific use cases, such as  account security and contract centers, and a set of Application Programming Interfaces.

On Dec. 8, 2021, TWLO launched Twilio Ventures and its new $50 million fund, which invests in the next generation of builders of  the future of customer engagement. Its investments include Algolia, Mux, Hyro, Calixa, Well Health Inc., and Terazo.

For its fiscal third quarter, ended Sept. 30, 2021, TWLO’s revenue increased 65% year-over-year to $740.17 million. The company’s non-GAAP income from operations increased 12.3% year-over-year to $8.20 million. In addition, its  non-GAAP gross profit increased 62.7% year-over-year to $399.89 million.

For its fiscal 2022, TWLO’s EPS is expected to increase 92.3% year-over-year to $0.02. Its revenue for its fiscal year 2021 is expected to increase 57.2% year-over-year to $2.77 billion. It has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has declined 55.3% in price to close the last trading session at $176.75. However, Wall Street analysts expect the stock to hit $355.19 in the near term, indicating a potential 101% upside.

DocuSign, Inc. (DOCU)

DOCU, in San Francisco, offers DocuSign Agreement Cloud, a software suite for automating the agreement process. It includes DocuSign eSignature, an electronic signature solution that allows an agreement to be signed electronically on various devices. The Agreement Cloud includes several other applications for automating pre- and post-signature processes.

DOCU’s revenues increased 42% year-over-year to $545.46 million for the third quarter, ended Oct. 31, 2021. The company’s subscription revenue came in at $528.57 million, representing a 44% increase year-over-year. Also, its net cash provided by operating activities increased 83.5% year-over-year to $105.41 million.

Analysts expect DOCU’s EPS and revenue for its fiscal 2022 to increase 120% and 43.7%, respectively, year-over-year to $1.98 and $2.09 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past six months, the stock has declined 63.3% in price to close the last trading session at $110.69. However, Wall Street analysts expect the stock to hit $203.69 in the near term, indicating a potential 84% upside.

ZM shares were trading at $142.40 per share on Friday morning, up $5.59 (+4.09%). Year-to-date, ZM has declined -22.57%, versus a -8.19% rise in the benchmark S&P 500 index during the same period.

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.

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