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The Zacks Analyst Blog Highlights: Okta, NIC, Microsoft, Covetrus and J2 Global

The Zacks Analyst Blog Highlights: Okta, NIC, Microsoft, Covetrus and J2 Global

For Immediate Release

Chicago, IL – December 21, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Okta, Inc. OKTA, NIC Inc. EGOV, Microsoft Corporation MSFT, Covetrus, Inc. CVET and J2 Global, Inc. JCOM.

Here are highlights from Friday’s Analyst Blog:

Missed Okta’s (OKTA) 2020 Rally? Buy These 3 Software Stocks for 2021

Okta has been one of the most fabulous software growth stories in 2020 so far. The company has been benefiting from robust demand for identity management services globally, triggered by the work-from-home wave. This $33.65-billion company has seen its share price surge 135.3% year to date.

Notably, Okta Identity Cloud platform offers a suite of applications that manage and secure identities. Customers use the platform to manage and secure their employees, contractors and partners (workforce identity) as well as enterprise’s own customers (customer identity).

Okta Identity Cloud’s capability to consolidate and easily integrate existing applications, without compromising on security or stability is attracting customers. Okta products’ ability to automate process, secure data and reduce costs is also a positive.

The company has rapidly expanded the scope and reach of the Okta Integration Network. As of Oct 31, 2020, the company had more than 6,500 integrations with cloud, mobile and web applications and IT infrastructure providers.

Markedly, Okta follows a SaaS-based delivery model and subscriptions account for the bulk of its revenues that makes its revenues more predictable. In the nine months ended Oct 31, 2020, subscription revenues jumped 50% year over year to $571.2 million.

Okta’s integration into the Amazon Web Services marketplace is expected to drive top-line growth. The company has also gained significant traction in the financial services industry with new and expanded deployments for Canadian Western Bank, First National of Nebraska, and Nota, powered by M&T Bank.

3 Software Stocks to Buy in 2021

The software space is expected to see a solid 2021 on strong demand for SaaS-based services amid the ongoing digital transformation as well as remote working, learning and diagnosis. Per Gartner’s latest report, Enterprise Software-related IT spending is expected to grow 7.2% year over year in 2021 following an estimated 3.6% decline in 2020.

Here we discuss three software stocks that are well-poised for an Okta-line run in 2021, driven by strong fundamentals. Moreover, these three companies either have a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Our Picks

NIC is benefiting from the accelerating rate of digital governance and mix shift to SaaS. The company’s expanding customer base is a key catalyst. Moreover, new contract wins across the states of Iowa and Florida remain key catalysts.

Further, this Zacks Rank #1 company is benefiting from the continued momentum in COVID-19 testing based on partnerships with Impact Health and NEXT Marketing.

Markedly, NIC’s solutions are gaining huge traction as they are helping the general public tackle coronavirus-led disruptions. For instance, cash payment solution, CheckFreePay, is helping residents make their property tax payments in cash. Moreover, Alabama Department of Revenue is now accepting online appointments for a variety of services through TeleGov, a service offered by NIC in collaboration with Microsoft.

Additionally, NIC’s outdoor recreation platform is set to go live in Pennsylvania and Illinois in the first quarter of 2021.

The Zacks Consensus Estimate for its 2020 earnings is pegged at $1.02 per share, having been revised 34.2% upward in the past 60 days. For 2021, the consensus mark for earnings has moved up 13.2% to $1.03 per share over the same time frame.

Covetrus is riding on strong coronavirus-led demand for online solutions for veterinarian practice. This Zacks Rank #2 company is helping veterinarians expand their digital presence. Moreover, robust pet adoption and higher incremental spending on pet care bode well for the company.

Covetrus’ growth prospects in 2021 are likely to be driven by its solid prescription management business. The company’s investment in expanding pharmacy capacity and innovative solutions are major growth drivers. Moreover, the company’s improved financial condition allows it to invest in veterinary study groups, which is expected to boost customer relationship.

Moreover, Covetrus plans to reach prescription management to Australia and New Zealand in the second half of 2021. This is expected to boost international growth. Further, cost-containment initiatives, as reflected by Covetrus’ exit from the low-margin distribution business in France, are expected to boost profitability.

The Zacks Consensus Estimate for its 2020 earnings stands at 85 cents per share, up 11.8% in the past 60 days. The consensus mark for its 2021 earnings is pegged at 91 cents per share, having been revised upward by 15.2% over the same time frame.

J2 Global’s advertising business has low exposure to local, travel, food, automotive and industry verticals most affected by the coronavirus, which has been a positive for overall business. This along with healthy display business (almost 40% healthcare) is expected to continue to drive top-line growth.

Cloud Services is expected to benefit from the company’s growing privacy and corporate fax businesses. Moreover, the coronavirus-led work-from-home wave bodes well as J2 Global’s security, privacy and voice services are considered indispensable for a remote working set-up.

Further, J2 Global’s growth-by-acquisition policy holds promise. Strategic acquisitions have expanded the company’s customer base, provided access to new markets and widened product line-up. The latest RetailMeNot buyout is expected to strengthen J2 Global’s footprint in the affiliate commerce industry.

The consensus mark for its 2020 bottom line is pegged at $7.92 per share, up 8.8% in the past 60 days. For 2021, the consensus mark for earnings has moved 15.1% north to $8.69 per share over the same time frame.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>

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Microsoft Corporation (MSFT): Free Stock Analysis Report
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NIC Inc. (EGOV): Free Stock Analysis Report
Okta, Inc. (OKTA): Free Stock Analysis Report
Covetrus, Inc. (CVET): Free Stock Analysis Report
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