The three major U.S. equity indexes closed mixed Thursday. The Dow Jones industrials added 0.46%, and the S&P 500 rose by 0.3% while the Nasdaq slipped by 0.26%. Eight of 11 sectors ended the day with small gains, led by health care (1.6%) and utilities (1.4%). Energy closed down 2.5%.
The Bureau of Labor Statistics releases its nonfarm payrolls report for August Friday morning. New jobs increased by 3150,000, well below the 526,000 jobs added in July. Headline unemployment rose from 3.5% to 3.7%. Investors are stoked. All three major indexes traded higher shortly after Friday’s opening bell.
After markets closed Thursday, Lululemon reported results that beat estimates on both the top and bottom lines. Revenue rose by nearly 29% year over year, and the company issued upside guidance for the current quarter and the full fiscal year. Shares traded up more than 11% early Friday.
Broadcom also reported top-line and bottom-line beats, with revenue rising nearly 25% year over year. The chipmaker also raised its current-quarter guidance. The stock was up about 3% in early trading.
U.S. markets are closed Monday for the Labor Day holiday. Here is a preview of three software companies set to report results after U.S. markets close on Tuesday.
Coupa Software
Shares of cloud-based business spending management provider Coupa Software Inc. (NASDAQ: COUP) have dropped by 77.7% over the past 12 months. The stock fell to its 52-week low about a week after reporting quarterly results in June, even though the company beat estimates and guided second-quarter results above estimates. It could be that integrating all the company’s previous acquisitions is weighing on the stock.
Of 30 brokerages covering the company, 14 have a Buy or Strong Buy rating and 13 have Hold ratings. At a recent price of around $56.50 a share, the upside potential based on a median price target of $80.00 is 41.6%. At the high price target of $108.00, the upside potential is 91.2%.
Second-quarter revenue is forecast at $203.99 million, which would be up 3.9% sequentially and by 13.8% year over year. Adjusted earnings per share (EPS) are forecast at $0.09, up 8.1% sequentially but down about 65.4% year over year. For the full 2023 fiscal year ending in January, Coupa is expected to post EPS of $0.25, down 70.2%, on sales of $840.24 million, up 15.9%.
The stock trades at 228.6 times expected 2023 EPS, 100.9 times estimated 2024 earnings of $0.56 and 52.5 times estimated 2025 earnings of $1.08 per share. The stock’s 52-week range is $50.54 to $270.79. Coupa does not pay a dividend. Total shareholder return for the past year is negative 77.7%.
GitLab
GitLab Inc. (NASDAQ: GTLB) provides a collaborative software development platform in the United States, Europe and Asia. The company came public in mid-October of last year and jumped to its post-IPO high less than a month later. Since the initial public offering, the shares have dropped by about 51.4%.
GitLab shares plunged more than 15% on Thursday following a downgrade to Neutral at J.P. Morgan and warnings from software growth stocks Okta and MongoDB. High interest rates are bad news for growth stocks and, coupled with the warnings, spelled worse news for GitLab.
Of 12 brokerages covering the company, 11 have a Buy or Strong Buy rating, with a Hold rating from the other. At a share price of around $50.50, the upside potential based on a median price target of $70.00 is about 39.4%. At the high price target of $95.00, the upside potential is about 88%.
Second-quarter revenue is forecast at $94.44 million, up 8% sequentially. Analysts have a consensus estimate for an adjusted per-share loss of $0.23, flat with the prior quarter’s loss. For the full 2023 fiscal year ending in January, GitLab is expected to post an adjusted loss of $0.89 per share compared to last year’s loss per share of $1.20. Revenue is forecast to rise 58.6% to $400.8 million.
GitLab is not expected to post a profit in 2023, 2024 or 2025. The company’s enterprise value to sales multiple for 2023 is 16.4. For 2024, the multiple is 11.6, and for 2025 it is 7.9. The stock’s 52-week range is $50.54 to $270.79. The company does not pay a dividend. GitLab’s one-year anniversary as a publicly traded company comes next month.
UiPath
UiPath Inc. (NYSE: PATH) makes and sells a business process automation platform. Over the past 12 months, shares have plunged by 74% on a steady downward trajectory that had slowed since touching a new low in mid-May. The stock’s 52-week high rolls off next week. UiPath’s market opportunity is enormous, but promises are selling well these days.
Of 22 analysts covering the stock, 15 have a Buy or Strong Buy rating on the shares, and six more have Hold ratings. At a share price of around $16.20, the upside potential based on a median price target of $25.00 is 54.3%. At the high price target of $45.00, the upside potential stretches to nearly 178%.
24/7 Wall St.UiPath is expected to report second-quarter fiscal 2023 revenue of $230.68 million, down 5.9% sequentially and 18.0% higher year over year. Analysts are forecasting an adjusted loss per share of $0.06, compared to a prior quarter loss of $0.03 per share and year-ago EPS of $0.012. For the full year, current estimates call for a per-share loss of $0.02, down from year-ago EPS of $0.08, and sales of $1.09 billion, up 22.1%.
The stock trades at 195.9 times estimated 2024 earnings of $0.08 and 121.1 times estimated 2025 earnings of $0.13 per share The stock’s 52-week range is $13.66 to $65.00. UiPath does not pay a dividend and the total shareholder return for the past year is negative 74%.
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