Apps & Software

Earnings Previews: CrowdStrike, DocuSign, Slack

The holiday-shortened week is drawing to an end with a whimper. There were no earnings reports of note scheduled at any time on Friday or before markets open on Monday. Following this preview, our next roundup will be published Friday and include reports due Monday afternoon and Tuesday morning.

Earlier Wednesday, we covered earnings reports from Ambarella, Hewlett Packard Enterprise and Zoom Video. This preview looks at three software firms reporting earnings after markets close Thursday, while a separate preview looks at Broadcom, ChargePoint and Lululemon, also expected to share their results then.

CrowdStrike

Cloud security firm CrowdStrike Holdings Inc. (NASDAQ: CRWD) also reports results after markets close Thursday. Shares added nearly 325% in 2020, but growth has stalled so far in 2021, with the shares trading up about 4.4%. Most of that gain has come in the past couple of weeks, following the company’s announcement of its selection as one of Ernst & Young’s preferred cybersecurity platforms.

Analysts are strongly bullish on the stock, with 19 of 21 rating the shares a Buy or Strong Buy. At a price of around $220.80, upside potential to a consensus price target of $250.48 is 13.4%. At the high target of $280, upside potential is about 27%.

The consensus estimates call for first-quarter EPS of $0.06 on sales of $291.4 million. For the full year, analysts are looking for EPS of $0.30 on sales of $1.32 billion.

Shares traded at a multiple of around 101.0 times expected 2021 EPS, 75.8 times estimated 2022 earnings and 35.3 times estimated 2023 earnings. The stock has traded between $88.87 and $251.28 a share in the past 52 weeks. The average daily trading volume is almost 4 million shares. CrowdStrike does not pay a dividend.

DocuSign

E-signature software firm DocuSign Inc. (NASDAQ: DOCU) saw its share price rise by 200% last year as it rode the crest of investment of growth stocks’ 2020 wave. The stock price has dipped by about 10% so far in 2021. The company has more than its e-signature product, including a suite of software it sells by subscription to help its customers write and execute contracts. But is that business worth a valuation of around $39 billion, more than either oil company Phillips 66 or steelmaker ArcelorMittal?

Brokers remain heavily bullish on the stock, with 18 of 22 rating the shares a Buy. At a price of nearly $200 a share, the implied gain at the consensus price target of $273.06 is about 36.5%. At the high target of $300, upside potential is 50%.

Consensus estimates call for first-quarter EPS of $0.28 on sales of $437.81 million. Full-year forecasts call for EPS of $1.31 on sales of $1.98 billion.

Shares trade at a multiple of 15.4 times expected 2022 EPS and 10.8 times estimated 2023 earnings. The stock’s 52-week range is $131.26 to $290.23. The average daily trading volume is about 2.8 million shares. DocuSign does not pay a dividend.

Slack

Workplace communications provider Slack Technologies Inc. (NYSE: WORK) posted a 2020 share price gain of almost 88%, including a 40% jump following the announcement that Salesforce would acquire the company for $27.7 billion in cash and stock. The deal hasn’t closed yet but is expected to be completed around the end of this month.

As investors might expect, most analysts have had Hold ratings on the stock since the Salesforce acquisition was announced. Still, two of 19 recommend buying the stock, and none recommends selling it.

For the quarter, the consensus estimates call for a loss per share of $0.01 on sales of $267.14 million and that should be the end of Slack’s run as a publicly traded company.

The stock’s 52-week trading range is $24.09 to $44.57, and the average daily volume is around 4.9 million shares. Shares were trading essentially flat Wednesday at $43.86.