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8 Tech Companies Set to Shine in a Social Distancing World in 2020

8 Tech Companies Set to Shine in a Social Distancing WorldPosted on Monday, March 23rd, 2020 by MarketBeat Staff

Telecommuting has been on the rise for many years. But it’s still not the norm. And that’s why, in the wake of our society’s call to flatten the curve of the coronavirus, more Americans find themselves in the unfamiliar position of working from home.

Aside from the mental and emotional challenge that some employees face from not having a defined workplace outside of the home, there are logistical challenges for businesses to ensure their employees can manage their work efficiently and effectively.

However, other Americans are sequestered, not by choice, but because they have no business to go-to for the time being. They face a different, unique set of challenges as more and more states begin to close bars, restaurants, and other social meeting venues.

It all happened so fast. And as an investor, it may be tough to think of investing in the market now, or ever again. But history favors those investors who have stayed the course even in the midst of a severe bear market that will quite possibly dip the economy into a recession. And that’s why we’ve identified 8 technology companies that are poised to have a breakout moment in this time of social distancing.

#1 - Netflix (NASDAQ:NFLX)

Netflix logo

One of the biggest beneficiaries of the world being stuck indoors is Netflix (NASDAQ:NFLX). The FAANG stock was facing a harsh reality as more competitors were entering the streaming space. But the imposed social distancing is creating an opportunity for Netflix for two reasons.

First, they have the advantage of simply being available. Although their most recent earnings report showed the company is losing subscribers, the company still has one of the strongest user bases in the streaming industry.

Second, unlike a snowstorm or other external event that keeps people at home, the coronavirus has shut down the world of sports. Netflix can successfully compete with traditional television programs and movies. It has a harder time being a choice for viewers over events like March Madness, the NBA playoffs, and the Masters. All of these events have been canceled or postponed in the wake of the coronavirus.

The long-term outlook for Netflix still presents some challenges. Competition is only increasing. And while consumers are showing they may have an appetite for more streaming services than they have previously suggested, Netflix still faces some tough math. They will almost certainly lose more subscribers as their most popular title, The Office, exits the platform in 2021. And, while they have a solid track record of Netflix original series, those programs cost a lot of money to produce. Declining revenue and rising costs is not a good formula, but as a short-term pick the stock looks good.

About Netflix
Netflix, Inc. provides Internet entertainment services. The company operates in three segments: Domestic streaming, International streaming, and Domestic DVD. It offers TV series, documentaries, and feature films across various genres and languages. The company provides members the ability to receive streaming content through a host of Internet-connected screens, including TVs, digital video players, television set-top boxes, and mobile devices. It also provides DVDs-by-mail membership services. The company has approximately 139 million paid members in 190 countries. Netflix, Inc. was founded in 1997 and is headquartered in Los Gatos, California.

Current Price: $357.12
Consensus Rating: Buy
Ratings Breakdown: 26 Buy Ratings, 9 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $382.00 (7.0% Upside)

#2 - Comcast (NASDAQ:CMCSA)

Comcast logo

Social distancing still requires being connected, and that’s good news for Comcast (NASDAQ:CMCSA). College students are now attending the University of Home, remote workspaces are now the norm. And with nowhere to go, the demand for online streaming services will be greater than ever.

Comcast can deliver for customers in a couple of key ways. First, their Xfinity subsidiary is a monopoly in certain areas. For example, in my neighborhood, Comcast Xfinity is the only provider of high-speed internet. It’s an overlooked point that in many areas, Comcast is the only game in town. And in times like these, that’s an important advantage.

Another advantage that Comcast is developing is the company’s emerging Peacock streaming service. According to Graybo, the digital video editing and production platform, while many consumers continue to cut the cord, an increasing number are finding value in their current cable provider. Peacock is promising a service that has a cable feel on a streaming platform. And it gives Comcast an important first-mover advantage.

The company is also doing its part to help in the Covid-19 crisis by offering two free months of internet service for low-income veterans. After the two-month trial, veterans can continue the service for as low as $9.99 per month.  

About Comcast
Comcast Corporation operates as a media and technology company worldwide. It operates through Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, Theme Parks, and Sky segments. The Cable Communications segment offers cable services, including high-speed Internet, video, voice, and security and automation services to residential and business customers under the Xfinity name; and advertising services. The Cable Networks segment operates national cable networks that provide various entertainment, news and information, and sports content; regional sports and news networks; international cable networks; and various digital properties, including brand-aligned Websites, as well as engages in the cable television studio production operations. The Broadcast Television segment operates NBC and Telemundo broadcast networks, NBC and Telemundo local broadcast television stations, broadcast television studio production operations, and various digital properties. The Filmed Entertainment segment produces, acquires, markets, and distributes filmed entertainment under the Universal Pictures, Illumination, DreamWorks Animation, and Focus Features names. It also develops, produces, and licenses stage plays; and distributes filmed entertainment produced by third parties. The Theme Parks segment operates Universal theme parks in Orlando, Florida; Hollywood, California; and Osaka, Japan. The Sky segment offers direct-to-consumer services, such as video, high-speed Internet, voice, and wireless phone services; and content services comprising operating entertainment networks, the Sky News broadcast network, and Sky Sports networks. The company also provides a wireless phone service under the Xfinity Mobile name; and owns the Philadelphia Flyers, as well as the Wells Fargo Center arena in Philadelphia, Pennsylvania. Comcast Corporation was founded in 1963 and is headquartered in Philadelphia, Pennsylvania.

Current Price: $34.57
Consensus Rating: Buy
Ratings Breakdown: 19 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $50.04 (44.7% Upside)

#3 - Cisco (NASDAQ:CSCO)

Cisco Systems logo

It’s possible that this period where many Americans are forced to work from home may make some of the trends that have been in place for some time a permanent part of our culture. One of the trends is the use of virtual private networks (VPNs). And Cisco (NASDAQ:CSCO) is one of the leading manufacturers of these networks. According to Mark Rounds, a management information systems instructor at the University of Idaho, this is only the beginning of a long-term trend towards employees using VPNs to work from home.

Cisco addresses a key need for businesses to have a proper work-from-home infrastructure. “Coronavirus may expose the underlying weakness of the existing telecommuting infrastructure on both the corporate and public side,” said Rounds. “Companies supplying the hardware that will be used to build a more robust infrastructure will increase in value and the prices of their products will be driven higher.”

And Cisco is more than just a hardware play. The company has Web-Ex “the leading enterprise solution for video conferencing, online meetings, screen share, and webinars.” 

Cisco is also seeing nice growth in its security business. And while this business has a lot more competition, Cisco can benefit from being able to provide a secure, and functional work-from-home infrastructure. And like many stocks right now, Cisco stock is selling at a heavy discount from its 52-week highs.

About Cisco Systems
Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry worldwide. The company offers switching products; routing products that interconnect public and private wireline and mobile networks; data center products; and wireless access points for use in voice, video, and data applications. It also provides collaboration products comprising unified communications, TelePresence, and conferencing, as well as the Internet of Things and analytics software. In addition, the company offers security products, including network and data center security, advanced threat protection, Web and email security, access and policy, unified threat management, advisory, integration, and managed services; and other products, such as service provider video software and solutions, and cloud and system management products. Further, it offers technical support services and advanced services; and hyperconvergence software, cloud calling and contact center solutions, and AI-driven relationship intelligence platform. The company serves businesses of various sizes, public institutions, governments, and service providers. It sells its products directly, as well as through channel partners, such as systems integrators, service providers, other resellers, and distributors. The company has collaboration agreements with KT Corporation and Bharti Airtel. Cisco Systems, Inc. was founded in 1984 and is headquartered in San Jose, California.

Current Price: $38.82
Consensus Rating: Buy
Ratings Breakdown: 17 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $52.77 (35.9% Upside)

#4 - Zoom (NASDAQ:ZM)

Zoom Video Communications logo

Speaking of video conferencing, Zoom (NASDAQ:ZM) is one of the most talked-about stocks in recent weeks. As employees work from home, it may very well change how employees and employers think about the need for meetings. But that’s a different discussion.

Until then, there’s Zoom, a competitor of WebEx. The outbreak of the coronavirus is providing Zoom with a moment to shine. That’s because schools, universities, and even children’s playgroups are finding applications for the company’s software.

The stock is up 90% in 2020 as of March 20. And since nobody knows how long this forced sequestering will last, Zoom has a nice long runway for investors. Plus, according to Needham analyst Richard Valera, the stock still has room to grow.

“We think Zoom’s exceptionally easy to use meetings product has both enabled and benefited from a long-term secular shift towards working from home,” says Valera. “We think Covid-19 is driving an enduring application of this shift. In the near-term, our checks confirm significant increases in business activity, especially in Covid hotspots, which admittedly could be mitigated by delays in closing larger enterprise deals.”

About Zoom Video Communications
Zoom Video Communications, Inc. provides a video-first communications platform that changes how people interact primarily in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. It connects people through frictionless video, voice, chat, and content sharing. The company's cloud-native platform enables face-to-face video experiences and connects users across various devices and locations in a single meeting. It serves education, entertainment/media, enterprise infrastructure, finance, healthcare, manufacturing, non-profit/not for profit and social impact, retail/consumer products, and software/Internet industries, as well as individuals. The company was formerly known as Zoom Communications, Inc. and changed its name to Zoom Video Communications, Inc. in May 2012. Zoom Video Communications, Inc. was founded in 2011 and is headquartered in San Jose, California.

Current Price: $151.70
Consensus Rating: Hold
Ratings Breakdown: 8 Buy Ratings, 14 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $98.78 (-34.9% Upside)

#5 - DocuSign (NASDAQ:DOCU)

Docusign logo

DocuSign (NASDAQ:DOCU) is another company that may find itself in the right place at the right time. Many consumers and businesses were already using DocuSign to securely scan and email important documents. That usage will only increase not only during this period of social distancing, but into the future.

You can also say that DocuSign is a beneficiary of perfect timing. The company posted a strong revenue increase of 39% for its 2020 fiscal year that ended on January 31, 2020. The company also posted positive forward guidance of a 31% revenue gain for fiscal 2021. DocuSign is on pace to log $1 billion in revenue, putting it in elite company among software-as-a-service (SaaS) companies.

The two catalysts that DocuSign believes can carry them through this slowdown and beyond are their efficiency and ability to set-up businesses remotely. If the economy does tip into a recession, DocuSign feels that the return on investment (ROI) that businesses receive will be obvious. And, as more companies resist the idea of having technicians come on site, DocuSign’s CEO Dan Springer says that, with the exception of some of its largest enterprise clients, the company can do most installation remotely.

Despite the sell-off in the market, DocuSign stock is still up about 5% for 2020.

About Docusign
DocuSign, Inc. provides cloud based software in the United States. The company offers e-signature solution that enables businesses to digitally prepare, execute, and act on agreements. The company sells its products through direct, partner-assisted, and Web-based sales. It serves enterprise businesses, commercial businesses, and small businesses, such as professionals, sole proprietorships and individuals. The company was 2003 and is headquartered in San Francisco, California.

Current Price: $82.57
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $78.73 (-4.6% Upside)

#6 - Microsoft (NASDAQ:MSFT)

Microsoft logo

Microsoft (NASDAQ:MSFT) has not been immune from the market sell-off. However, there was talk since the beginning of the year that Microsoft was overbought and investors were probably looking to take some profit. However, MSFT stock is down about 15% for the year and looks like it’s trying to form a base.

The reason I’m optimistic about Microsoft’s recovery has to do with Teams, the company’s entry into the productivity software space. Teams is a newcomer to a space in which Slack (WORK) is an established competitor. Like Slack, Teams combines features of social networking with productivity and collaboration tools. Employees can instant message and share files.

However, Microsoft Teams is growing faster than Slack and Teams will be an attractive addition to the company’s Office 365 suite of products. In fact, one of the catalysts for Microsoft is that they have an existing relationship with many customers. And as they continue to expand in cloud computing, via its Azure platform, it has an easy point of entry to introduce customers to Teams.

About Microsoft
Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide. Its company's Productivity and Business Processes segment offers Office 365 commercial products and services, such as Office, Exchange, SharePoint, Skype for Business, Microsoft Teams, and related Client Access Licenses (CALs); Office 365 consumer services, including Skype, Outlook.com, and OneDrive; LinkedIn online professional network; and Dynamics business solutions comprising financial management, enterprise resource planning, customer relationship management, supply chain management, and analytics applications for small and medium businesses, large organizations, and divisions of enterprises. The company's Intelligent Cloud segment licenses server products and cloud services, such as SQL Server, Windows Server, Visual Studio, System Center, and related CALs, as well as Azure, a cloud platform; and enterprise services, including premier support and Microsoft consulting services to assist customers in developing, deploying, and managing Microsoft server and desktop solutions, as well as provides training and certification to developers and IT professionals. Its More Personal Computing segment offers Windows OEM, volume, and other non-volume licensing of the Windows operating system; patent licensing, Windows Internet of Things, and MSN display advertising; devices comprising Surface, PC accessories, and other intelligent devices; Xbox hardware and software and services; and Bing and Bing Ads search advertising. It markets its products through original equipment manufacturers, distributors, and resellers; and online and Microsoft retail stores. Microsoft Corporation has collaboration with E.ON, NIIT Technologies Ltd., and CUNA Mutual Group; strategic alliance with Nielsen Holdings plc and PAREXEL International Corp.; and a strategic collaboration with Mastercard Incorporated. The company was founded in 1975 and is headquartered in Redmond, Washington.

Current Price: $149.70
Consensus Rating: Buy
Ratings Breakdown: 32 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $185.47 (23.9% Upside)

#7 - Twitter (NYSE:TWTR)

Twitter logo

It’s not surprising that in this period of sheltering I’m seeing social media posts from people I haven’t heard from in years. While many social media sites should see an increase in daily active users (DAUs), I like Twitter (NYSE:TWTR).

An argument against social media stocks right now is that advertisers are unlikely to continue to pay a premium for ad space. Since Twitter, like Facebook (FB) and Google (GOOGL) rely on advertising revenue, it would make sense that the company would see their share price decline.

However, supply and demand still rules the roost. And Twitter is, for better or worse, becoming a key source of news for many Americans. What started out as a space for quirky, short posts has turned into a go-to source for journalists and media outlets to drop breaking news. It also is a place of (ahem) lively discussion.

That’s a combination that should entice advertisers to at least continue advertising on the platform. And since Twitter has announced aggressive steps to fight misinformation about the coronavirus, they are hoping to convince advertisers that they should still be a sought-after platform.

About Twitter
Twitter, Inc. operates as a platform for public self-expression and conversation in real time. The company offers various products and services, including Twitter, a platform that allows users to consume, create, distribute, and discover content; and Periscope, a mobile application that enables user to broadcast and watch video live with others. It also provides promoted products and services, such as promoted tweets, promoted accounts, and promoted trends, which enable its advertisers to promote their brands, products, and services. In addition, the company offers a set of tools, public APIs, and embeddable widgets for developers to contribute their content to its platform, syndicate and distribute Twitter content across their properties, and enhance their Websites and applications with Twitter content. Further, it provides subscription access to its public data feed for data partners. The company operates in the United States and internationally. Twitter, Inc. was founded in 2006 and is headquartered in San Francisco, California.

Current Price: $25.29
Consensus Rating: Hold
Ratings Breakdown: 8 Buy Ratings, 23 Hold Ratings, 8 Sell Ratings.
Consensus Price Target: $36.02 (42.4% Upside)

#8 - Teladoc Health (NYSE:TDOC)

Teladoc Health logo

Teladoc Health (NYSE:TDOC) is a stock for investors with higher risk tolerance. The company is not yet profitable, but it’s about to have a massive opportunity. The Trump administration has authorized an expansion of services like the kind provided by Teladoc and other companies.

Several states, although admittedly not a flood of them, are expanding their telehealth services. The goal is to allow doctors and patients to easily connect online. The state of Washington is moving to allow doctors to treat patients voluntarily even if they are not licensed in the state (they must be licensed elsewhere).

Currently, 260 doctors have volunteered, but the vetting process will take months. And then getting licensed can is still a lengthy, and expensive, venture.

I have to admit, I struggle with the idea of receiving a virtual diagnosis. But this may be the way society will move. If contagious patients can be kept away from a doctor’s office, but still get the care they need, it could be a major win.

As of March 20, TDOC stock was up 70% for the year.

About Teladoc Health
Teladoc Health, Inc. provides telehealth services. It offers a portfolio of services and solutions covering 450 medical subspecialties, such as flu and upper respiratory infections, cancer, and congestive heart failure. The company provides its services through mobile devices, the Internet, video, and phone. It serves employers, health plans, health systems, and other entities in approximately 100 countries worldwide. Teladoc Health, Inc. has a collaboration with Cincinnati Children's Hospital Medical Center to develop a consumer pediatric telehealth platform. The company was formerly known as Teladoc, Inc. and changed its name to Teladoc Health, Inc. in August 2018. Teladoc Health, Inc. was founded in 2002 and is headquartered in Purchase, New York.

Current Price: $164.16
Consensus Rating: Buy
Ratings Breakdown: 13 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $123.23 (-24.9% Upside)

Things may seem bleak at the moment. The coronavirus is sapping a little of our nation’s national energy. But we are an adaptable society. And adapting we are. If you were paying attention last week, stocks tended to rally on the hint of a medical solution. A vaccine is months if not a year away. But antivirals may be much closer. Until then, Americans are being asked to stay indoors as much as possible. And if they do have to go out, they are being tasked with maintaining an appropriate social distance.

As we put our faith in science, we are also increasingly going to be putting our trust in technology. The companies that we’ve discussed in this presentation will be helping Americans find comfort, work efficiently, provide routine, and perhaps even stay healthy in the coming weeks and, perhaps, months.

Every crisis changes society in some ways. And that will be the case in the aftermath of the coronavirus. The definition of where, and how, we work may be redefined forever. And these companies are likely to be part of that changing economy.

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