The Zacks Analyst Blog Highlights Splunk, Fortinet, Palo Alto Networks and Mettler-Toledo
For Immediate Release
Chicago, IL – October 18, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Splunk SPLK, Fortinet FTNT, Palo Alto Networks PANW and Mettler-Toledo International MTD.
Here are highlights from Monday’s Analyst Blog:
4 Oversold Growth Tech Stocks to Buy Before They Rebound
The broader equity market has been highly volatile so far this year on increasing pessimism around the possibility of a recession amid rising interest rates, soaring inflation and supply-chain issues. The ongoing Russia-Ukraine war has further increased worries for investors about a global economic recovery.
Technology is among the most-battered sectors amid the broader market sell-off this year so far. Technology Select Sector SPDR Fund, which seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the Technology Select Sector Index, has lost approximately 32.8% of its value year to date (YTD). Also, the Nasdaq Composite index, which has the maximum weightage of tech stocks (approximately 50%) in its components, has plunged 34% YTD.
However, this sell-off in the broader equity market has led to a massive correction in several technology companies’ stock prices, which were considered to be widely overvalued at the sector’s peak in 2021. With this correction, several tech stocks are currently trading way below their 52-week high and at attractive valuations as well, despite their strong fundamentals.
In our opinion, Splunk, Fortinet, Palo Alto Networks and Mettler-Toledo International are among the most beaten-down stocks in the technology space. Given the strength of their fundamentals and solid prospects, it would be prudent move to add these stocks to your portfolio.
Why Should You Bet on the Aforementioned Tech Stocks?
Amid the financial instability, it is a prudent idea to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks, with their solid fundamentals, allow investors to hedge their funds from any economic downturn. Moreover, these fundamentally strong stocks are likely to outshine once the current macro headwinds subside and market sentiments improve.
Apart from having solid fundamentals, the long-term earnings growth rate for the aforementioned stocks is more than 10%. These stocks also have a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or #2 (Buy).
Per Zacks’ proprietary methodology, stocks with such a favorable combination offer solid investment opportunities.
Additionally, these stocks are currently trading way below their 52-week high and are now available at attractive valuations.
Our Picks
Splunk– This San Francisco, CA-based company gains from strong execution across its platform, observability and security businesses as organizations partner with it to secure their infrastructure.
Splunk’s software can be deployed in various computing environments, from a single laptop to large distributed data centers. This feature is helping Splunk win customers. The integration with Amazon Web Services security hub to help customers accelerate their response to potential threats is a key catalyst.
SPLK currently sports a Zacks Rank #1 and has a Growth Score of B. Shares of the company have plunged 39.3% YTD and currently trade 60.2% lower than its 52-week high of $176.66 attained on Nov 10, 2021. Moreover, the stock trades at a one-year forward price-to-sales of 2.99X compared with its five-year average of 8.21X. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Splunk’s fiscal 2023 earnings has improved to 84 cents per share from 18 cents over the past 60 days, implying a strong improvement from the fiscal 2022 loss of $1.25 per share. For fiscal 2024, the consensus mark for earnings has been revised upward by 10 cents to $1.52 per share over the past 30 days, indicating year-over-year growth of 81.1%. The long-term earnings growth rate for the stock is pegged at 30%.
Splunk Inc. Price and Consensus
Splunk Inc. price-consensus-chart | Splunk Inc. Quote
Fortinet– It is a provider of network security appliances and Unified Threat Management (UTM) network security solutions to enterprises, service providers and government entities worldwide. Its solutions are designed to integrate multiple levels of security protection, including firewall, virtual private networking, antivirus, intrusion prevention, web filtering, anti-spam and wide area network (WAN) acceleration.
Fortinet is benefiting from rising demand for security and networking products amid the growing hybrid working trend. It is also benefiting from robust growth in Fortinet Security Fabric, cloud and Software-defined Wide Area Network (SD-WAN) offerings. Moreover, continued deal wins, especially those of high value, are a key driver. Higher IT spending on cybersecurity is further expected to aid Fortinet in growing faster than the security market. Also, its focus on enhancing its UTM portfolio through product development and acquisitions is a tailwind for Fortinet.
FTNT currently sports a Zacks Rank #1 and has a Growth Score of B. Shares of the company have plunged 33% YTD and currently trade 35.3% lower than its 52-week high of $74.35 attained on Dec 29, 2021. Moreover, the stock trades at a one-year forward price-to-earnings of 38.57X compared with its five-year average of 66.69X.
The Zacks Consensus Estimate for Fortinet’s 2022 earnings has improved a penny to $1.05 per share over the past 60 days, suggesting a year-over-year increase of 31.3%. For 2023, the consensus mark for earnings has been revised upward by a penny to $1.30 per share over the past seven days, indicating year-over-year growth of 23.9%. The long-term earnings growth rate for the stock is pegged at 18%.
Fortinet, Inc. price-consensus-chart | Fortinet, Inc. Quote
Palo Alto Networks– The company offers network security solutions to enterprises, service providers and government entities worldwide. It is benefiting from the increased adoption of its next-generation security platforms, driven by a rise in the remote working policy among top-notch companies.
Palo Alto Networks continues to win back-to-back deals for offering unique cyber safety solutions, which ensure the blocking of attacks or malicious content. It is currently focusing on selling more subscription-based services, which, in turn, are helping it to generate stable revenues while expanding margins.
PANW currently carries a Zacks Rank #2 and has a Growth Score of A. Shares of the company have plunged 16.6% YTD and are currently trading 27.5% lower than its 52-week high of $213.63 attained on Apr 20, 2022. Moreover, the stock trades at a one-year forward price-to-sales of 6.45X compared with its five-year average of 6.86X.
The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2023 earnings has improved 6 cents to $3.15 per share over the past 60 days, implying a year-over-year increase of 25%. For fiscal 2024, the consensus mark for earnings has been revised downward by a couple of cents to $3.82 per share over the past 30 days, indicating year-over-year growth of 21.3%. The long-term earnings growth rate for the stock is pegged at 31.5%.
Palo Alto Networks, Inc. price-consensus-chart | Palo Alto Networks, Inc. Quote
Mettler-Toledo– It is the world's largest manufacturer and marketer of weighing instruments for use in laboratory, industrial and food retailing applications. The company is also a leading provider of analytical instruments for use in life science, reaction engineering and real-time analytic systems used in drug and chemical compound development, and process analytics instruments used for in-line measurement in production processes.
Mettler Toledo is benefiting from solid momentum across its laboratory and industrial segments. The company’s strengthening presence in the Americas, Europe, Asia and the Rest of the World remains a positive. Furthermore, portfolio strength, cost-cutting efforts, robust sales and marketing strategies benefit from investments in Spinnaker sales. Field resources are contributing well. Also, a strong core industrial business is encouraging. Solid demand across pharmaceutical and life science markets is a tailwind.
MTD currently carries a Zacks Rank #2 and has a Growth Score of B. Shares of the company have plunged 34.2% YTD and currently trade 34.9% lower than its 52-week high of $1,714.75 attained on Dec 30, 2021. Moreover, the stock trades at a one-year forward price-to-earnings of 26.57X compared with its five-year average of 31.82X.
The Zacks Consensus Estimate for Mettler-Toledo’s 2022 earnings has improved a penny to $39.01 per share over the past 30 days, indicating a year-over-year increase of 14.7%. For 2023, the consensus mark for earnings has been revised upward by 3 cents to $42.83 per share over the past 30 days, suggesting year-over-year growth of 9.8%. The long-term earnings growth rate for the stock is pegged at 10.4%.
MettlerToledo International, Inc. price-consensus-chart | MettlerToledo International, Inc. Quote
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