Speculative technology stocks have been crushed over the past year, with even the most exciting of hyper-growth stocks now down more than 50% from their highs. As the rate-fueled selling pressure on speculative, unprofitable growth companies continues into the second half, dip-buyers could continue to take a beating.
Though many fallen tech stocks will never see their highs again, various high-tech firms are more than capable of recovering. Not all hyper-growth companies are built the same. Some have what it takes to grow through a recession while making efforts towards improving profitability prospects.
In this piece, we used TipRanks’ Comparison Tool to look at three innovative big-data companies that Wall Street is bullish on.
Snowflake (SNOW)
Snowflake is a data-lake and data-warehousing company that continues to receive upgrades despite the recent barrage of negative momentum. The stock lost around 74% of its value from peak to trough before upbeat analysts sent shares rallying towards $150 per share.
Amid the latest round of selling, Snowflake stock is back on the descent, now near the $144 mark on virtually no news. Though the stock has the propensity to amplify moves made by the broader Nasdaq 100, it’s worth noting that the firm continues to enhance its offering.
CIOs love Snowflake and expect to spend an increasing amount of corporate IT budgets on usage over time. That’s a testament to how great Snowflake’s technologies really are.
JPMorgan (JPM) went as far as to say that Snowflake is in “elite territory.” Just how elite? Perhaps Snowflake could weather the coming economic snowstorm far better than other firms in the enterprise.
Looking ahead, Snowflake is looking to make a big splash in the realm of cybersecurity, with a new workload capable of discovering potential threats across massive datasets. Snowflake’s cybersecurity workload is very intriguing and could give it an edge over its top rival Databricks.
At over 32 times sales, Snowflake stock remains incredibly expensive. However, margin trends are encouraging, as is the firm’s trajectory of cash flows. As one of few firms that can maintain hyper-growth while improving profitability prospects, Snowflake is likely more than worthy of such a pie-in-the-sky multiple.
Wall Street is incredibly bullish based on 23 Buys, five Holds, and one Sell rating assigned in the past three months – giving it a Strong Buy rating. The average Snowflake price target of $193.72, implying 34% upside potential.
Datadog (DDOG)
Datadog is another big-data company helping businesses unlock the full power of their datasets. The firm’s real-time data-monitoring platform helps make it convenient for corporations to generate insightful analyses across the entire stack. Though coming macroeconomic headwinds could weigh on growth, I think such a potential growth slip is more of a road bump than a sustained slowdown in Datadog’s growth engine.
It’s not just data monitoring and analysis where Datadog can shine. The company also looks to be building a nice ecosystem across other market verticals. Like Snowflake, Datadog is hungry to make strides in the security space. More recently, the firm launched Audit Trail, its compliance and governance offering that could be a hot seller among existing customers.
Datadog is a magnificent player in the niche market of FSMA (full-stack monitoring and analysis). Though the firm is relatively small ($31.8 billion market cap), with deep-pocketed rivals, it’s hardly an underdog (forgive the pun), as IT spending continues to stay robust at the hands of the long-term digital transformation.
At 26.6 times sales, DDOG stock is not cheap. However, in this market, you’ve still got to pay up for premium growth.
Wall Street is standing by the stock, with a Strong Buy rating based on 18 Buys and two Holds. The average Datadog price target of $165.11 implies 63.4% upside.
MongoDB (MDB)
MongoDB is another expensive big-data play that may not be as pricey as it seems, given its high-quality growth prospects and ability to push into profitability in the future.
The scalable general-purpose database company trades at about 19 times sales at writing. Analysts have slowly lowered the bar on their price targets in recent weeks, yet the stock continues to be viewed in a positive light by the analyst community. At writing, shares are down more than 55% from their highs.
Despite the cutting-edge innovations, investors have soured on the $18.3 billion company, as it’s still putting its foot to the gas to spark maximum sales growth, even at the cost of steeper losses over the medium term.
MongoDB is well on its way to taking share in the database scene. However, it still has a long way to go if it’s to challenge the incumbents in the enterprise database scene.
In early June, MongoDB flexed its muscles at its world conference. Many were impressed by the innovations, which could help take the firm’s growth to the next level. MongoDB still has its disruptor hat on, but with minimal evidence of a sustained profitability push on the horizon, investors could sour on the stock for longer.
Wall Street is bullish on the name, with the average MongoDB price target of $377.00 implying 36.2% upside potential. In the past three months, there were 14 Buys, three Holds, and one Sell rating assigned for a Moderate Buy consensus rating.
Conclusion
Big data stocks have taken a beating of late, but analysts are bullish on these particular companies. Currently, analysts seem most optimistic about Datadog.
Though price target downgrades could continue flowing in, I think the following three big-data plays will rise again, perhaps faster than most other hyper-growth disruptors that have seen their share prices be obliterated.