Technology

Why Last Year's Loser IPOs Are Some of the Biggest Winners in 2020

Fastly

This edge cloud computing company posted a huge first quarter and could be poised to move much higher. Fastly Inc. (NYSE: FSLY) is an emerging technology leader in the high-growth content delivery networking (CDN) market. CDN vendors deliver content for enterprises and media/content providers, charging per bandwidth delivered.

Fastly’s network architecture is a combination of best-of-breed hardware and a patented software stack based on open source protocols. This unique stack enables the company to immediately deliver content globally and provide differentiated edge compute services and programmability.

The company reported outstanding first-quarter numbers. The analysts said this:

Fastly reported strong first quarter results; second quarter revenue/EPS guidance of $71 million and -1c was above Street by $11 million/0.10. Fiscal year 2020 guidance raised. Due to COVID-19, network traffic and utilization are increasing, and Enterprise digital transformation deals are accelerating. The guidance indicates strong demand for Fastly’s technology versus short-term traffic spikes.

The BofA Securities price target is $32, which is higher than the $26.78 consensus reading. Fastly stock has blown through both levels, closing Friday at $39.50.

Ping

This is another cyber and data security company that was shellacked after the IPO, but it offers an incredible price point now. Ping Identity Holding Corp. (NYSE: PING) is a leader in Identity Access and Management. Its products safeguard enterprise applications and data by providing controls around user authentication, access and more.

Ping’s single-sign-on technology helps streamline user workflow by providing a single password for multiple applications to reduce log-ins. Additional product features include consumer identity management, Internet of Things (IoT) and application programming interface (API) management. Ping differentiates with a history of complex deployments across hybrid networks.

The Ping Intelligent Identity platform provides customers, employees, partners and, increasingly, IoT, with access to cloud, mobile, software as a service and on-premises applications and APIs, while also managing identity and profile data at scale. Over half of the Fortune 100 choose to use the company for the identity expertise, open standards leadership and partnership with companies including Microsoft and Amazon.

The analysts noted this last week after Ping released earnings:

Solid results overshadowed by weak second quarter revenue guidance for $51 million vs Street’s $63 million due to COVID-19 impact. Management sees deal push-outs in large deals and highly impacted industries; customers also opting for shorter term licenses. We remain bullish on the Identity security market and traction with newer cloud products; and reiterate Buy.

The $27 BofA Securities price target compares with the $25.96 consensus target. Ping stock closed most recently at $23.16.

Peloton Interactive

This cycling and exercise platform had a 2019 initial public offering that initially performed poorly but has taken off. Peloton Interactive Inc. (NASDAQ: PTON) is the largest global interactive fitness platform, with a community of over 1.4 million members.

The company offers workout bikes and treadmills that include a touchscreen that streams live and on-demand classes for indoor cycling, running, walking, boot camp, yoga, strength training and meditation. The company serves customers in the United States, Canada, United Kingdom and Germany.

Recent reports suggest that Peloton could introduce a lower-priced treadmill and a rowing machine this year. Data suggests the tread market could be larger than the bike, so a tread priced similar to the bike should see better adoption. With a focus on at-home fitness even greater with the stay-at-home and lockdown edicts in place around the country, the company has plenty of upside.

The analysts are extremely positive, saying this after bullish earnings:

Strong quarter with outlook for revenue/EBITDA/subscriptions/churn much higher than Street expectations. Raising 2020 and 2021 estimates; we think demand and usage surge exiting fiscal year 2020 and sets Peloton up for a better fiscal 2021. Reiterate Buy; While fiscal third quarter upside is positive, we continue to anticipate an ongoing benefit from long term consumer behavior change.

The BofA Securities price target is $48. The consensus target is $38.48, and Peloton stock closed at $48.42, up over 7% on Friday.


These five stocks may have stumbled somewhat out of the gate, but they have come on super-strong in 2020. Given some of the recent big moves higher, aggressive accounts may want to start building positions here but look for a retracement of the recent rally to add additional shares at lower levels.