A Trio of Tech Stocks for Growth-Focused Investors

These companies have improved quarterly sales and net income substantially

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Oct 03, 2022
Summary
  • Marvell Technology Inc., IonQ Inc. and ExlService Holdings Inc. are attracting the interest of investors seeking growth in the technology industry.
  • Wall Street sell-side analysts are optimistic about these stocks.
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The following tech companies have seen their quarterly revenue and net income improve significantly on a year-over-year basis, attracting the interest of growth-focused investors. Furthermore, sell-side analysts on Wall Street have issued positive recommendation ratings for these stocks, suggesting they expect better market valuations in the future.

Marvell Technology Inc.

The first stock that meets the criteria is Marvell Technology Inc. (

MRVL, Financial), a Wilmington, Delaware-based fabless chip manufacturer that focuses on network and storage applications in the United States and internationally.

Thanks to an acquisition-driven growth strategy launched in 2017, the company has moved away from legacy consumer applications and is now positioned to address the demand of the cloud and 5G markets.

Marvell Technology Inc.'s quarterly revenue increased 41% year over year to approximately $1.52 billion for the most recent fiscal quarter ended July 29, 2022. Revenue was $1.08 billion in the prior-year quarter.

The company posted a net profit of $4.3 million for the quarter, reflecting a positive turnaround from the net loss of $276.4 million in the same quarter last year.

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Looking ahead to the next quarter ending this month, net sales should be in the range of $1.51 billion to $1.61 billion (up 24.8% to 33.1% from the same quarter in 2021) based on the company's guidance, with analyst consensus estimates of $1.56 billion. Diluted pro forma earnings per share should be in the range of $0.56 to $0.62 (up 64.7% to 82.4% year over year); analysts are expecting $0.59. In addition, the company expects the volume of weighted average shares outstanding to be 862 million on a diluted basis. Diluted pro forma net income should therefore be between $482.72 million and $534.44 million.

Commenting on Marvell's financial results for the second quarter of fiscal 2023, Matt Murphy, Marvell's President and CEO, said revenue growth will continue as the company continues to expand its leadership position in data infrastructure. Another boost will come from easing supply constraints, strong long-term growth trends and an expected surge in demand for a range of Marvell-specific products.

The stock was trading at $42.91 per share at close on Sept. 30 following a 25.49% decline over the past year for a market capitalization of $36.59 billion and a 52-week range of $41.07 to $93.85.

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The stock has a price-sales ratio of 6.58 versus the industry median of 2.01.

GuruFocus has given the company a rating of 6 out of 10 for financial strength and 6 out of 10 for profitability.

On Wall Street, the stock has a median buy recommendation rating of and an average target price of $73.71 per share.

IonQ Inc.

The second stock to make the cut is IonQ Inc. (

IONQ, Financial), a College Park, Maryland-based leader in next-generation quantum computing that has the most powerful trapped-ion quantum computer technology.

IonQ Inc. is the only technology of its kind available through the cloud on Amazon (

AMZN, Financial) Braket, Microsoft (MSFT, Financial) Azure and Alphabet's (GOOG, Financial)(GOOGL, Financial) Google Cloud and through direct API access.

IonQ Inc.'s quarterly revenue increased 28-fold year over year to $2.6 million as of the June 2022 quarter. Revenue was just $93,000 in the prior-year quarter.

Although the company reported a net loss of $1.65 million for the quarter, that was a significant 83.5% improvement over the net loss of $10 million in the year-ago quarter.

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Looking ahead to the third quarter of 2022, IonQ said revenue should be in the range of $2.6 million to $2.9 million (11.2 to 12.4 times upside from the prior year’s quarter), while Wall Street analysts’ estimates for revenue average of $2.73 million.

For the full-year 2022, IonQ expects revenue to be between $10.2 million and $10.7 million (4.9 times to 5.1 times increase over the full year 2021) versus a consensus of $10.64 million.

The company has not provided any information on net income guidance for the year. However, analysts are estimating a loss of 10 cents per share for the third quarter of 2022, which would result in approximately $20 million based on the current volume of 199.21 million shares. Also, analysts are estimating a net loss of 27 cents per share, resulting in a net loss of $53.8 million for all of fiscal 2022.

Commenting on the second-quarter 2022 financial results, President and CEO Peter Chapman said the new quantum computer called Aria, which is next to hit cloud networks, will perform more than 130,000 calculations than the previous technology. This will be available to quantum programmers who can count on a very bright future.

The stock was trading at $5.07 per share at the close of regular hours on Sept. 30 following a 32.5% drop that occurred over the past year, determining a market capitalization of $1.01 billion and a 52-week range of $4.16 to $35.90.

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The stock has price-sales ratio of 158.44 versus the industry median of 1.16.

GuruFocus has given the company a rating of 8 out of 10 for financial strength and 1 out of 10 for profitability.

On Wall Street, the stock has a median overweight recommendation rating with an average target price of about $10.50 per share.

ExlService Holdings Inc.

The third company that qualifies is ExlService Holdings Inc. (

EXLS, Financial), a New York-based provider of business process outsourcing, automation services and data-driven insights to clients across multiple industries.

Customers come from the insurance, health care, utilities, banking and finance, travel and retail industries, among others. The United States is the company's largest market. More than 50% of total revenue comes from the sale of business process management solutions and related services.

ExlService Holdings Inc.'s quarterly revenue increased 26.1% year over year to $346.8 million as of the June 2022 quarter. Revenue was $275.1 million in the prior-year quarter.

The company reported net income of $35.8 million, up nearly 28% year over year from net income of $28 million in the year-ago quarter.

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Looking ahead to full-year 2022, the company said revenue should be between $1.35 billion and $1.37 billion, while analysts have provided a $1.6 billion consensus. This would represent an increase of 20% to 22%.

Diluted pro forma earnings per share are expected to be in the range of $5.60 to $5.80 (consensus calls for $5.73), up 16% to 20% from 2021. Based on 33.06 million shares outstanding at the time of writing, the diluted pro forma EPS leads to $185.14 million to $191.75 million pro forma net income versus $165.57 million in 2021.

Commenting on the second quarter 2022 results, Rohit Kapoor, Vice Chairman and CEO, said future growth will continue to be driven by the company's data-driven solutions. These technologies are growing in popularity among clients with domain expertise, Artificial Intelligence (AI) and digital capabilities.

He added that the value proposition of helping customers grow and become increasingly profitable will not lose its purpose as it moves through the business cycle. He also forecasts strong and favorable market conditions for the second half of 2022.

The stock was trading at around $147.36 on Sept. 30 after rising 16.7% over the past year. It has a market cap of $4.87 billion and a 52-week range of $112.14 to $179.81.

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The stock has a price-earnings ratio of 39.51 versus the industry median of 22.96 and a price-sales ratio of 3.97 versus the industry median of 2.33.

GuruFocus assigned a score of 8 out of 10 to the company's financial strength and 10 out of 10 to its profitability.

On Wall Street, the stock has a median overweight recommendation rating with an average target price of about $169.14 per share.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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