National Bank Financial delivered a fourth quarter earnings preview on January 23, saying while the road ahead may be bumpy for tech stocks, investors looking at a longer term horizon still have some select names to choose from.
In any industry, opportunities can emerge in the wake of crisis, and with the pandemic still very much in effect, the technology sector is a prime example. Ahead of the Q4 reporting session, National Bank of Canada analysts Richard Tse and John Shao were cautious in their overview of technology in the midst of a shift from growth to value, though they also noted change has been minimal within their particular coverage window.
“No doubt, a lot is riding on earnings season given the heightened volatility across Tech and while we provide our expectations for our coverage group in this note, the reality is that the entire group will be drawn in by what happens with the megacap (largely U.S.) tech names that begin reporting over the next few weeks,” Tse said.
The report also made note of the contributions of moderate estimate revisions in the S&P Tech Index in relation to any pullbacks that have been seen in the sector on top of the standard rates and inflation, leading to a question of whether or not those expectations are too conservative, or are closer to reality.
In general, Tse and Shao remain optimistic about the sector, particularly with respect to a few names like Docebo, Lightspeed and Shopify which the analysts say demonstrate long-term investment opportunities given certain valuation disconnects.
And with those dynamics in mind, Tse and Shao presented 22 stocks in their quarterly preview, listed below in alphabetical order.
Thinkific Labs (Thinkific Labs Stock Quote, Chart, News, Analysts, Financials TSX:THNC)
- National Bank Rating: Outperform (Unchanged)
Target Price: $15/share (previously $20/share)
Projected one-year return: 147.1 per cent
In a similar vein to D2L and Docebo, Thinkific Labs is in the online education space as a course creator platform, with the ongoing rollout of its Payments platform in Canada and the United States serving as a next step as the company tries to get a greater piece of the available GMV
“In our view, the company continues to execute its strategy laid out at the time of its IPO,” Tse said. “On that, Thinkific remains in investment mode given its early days in the Company’s growth trajectory. Our view is that such investments will continue to fortify what we believe to be a leading platform for course creators. All-in, we view Thinkific as a developing name with some short-term risk from challenging year-over-year comparables, care of COVID.”
Tse has forecasting Q4 revenue of US$11 million and negative US$0.11 per share in earnings.