The COVID-19 pandemic made cloud computing critical as organizations were forced to adopt cloud technologies to stay operational remotely. According to a recent survey, around 60% of millennials would now prefer to join companies with hybrid work structures, which evidences the growing need for cloud infrastructure.
Alongside large corporations, the cloud migration of small, new players and SMEs is also driving this market’s growth. Faster data communication and storage, cost-cutting, optimum use of resources, and enhanced management capabilities are some of the factors inclining businesses toward rapid cloud migration. Global cloud expenditure is expected to rise by more than $947 billion by 2026, and the market is expected to grow at a 17.5% CAGR through 2025.
Given the backdrop, we believe fundamentally sound cloud computing stocks IQVIA Holdings Inc. (IQV), F5, Inc. (FFIV), and VMware, Inc. (VMW) could be solid additions to one’s portfolio now.
Click here to check out our Cloud Computing Industry Report for 2022
IQVIA Holdings Inc. (IQV)
IQV in Parsippany, N.J., provides advanced analytics, technology solutions, and clinical research services to the life sciences industry. It operates through three segments: Technology & Analytics Solutions; Research & Development Solutions; and Contract Sales & Medical Solutions.
On March 16, 2022, IQV announced the launch of OCE+, a new advancement to the company’s leading life science customer engagement platform. OCE+ uses IQV’s data and advanced analytics to deliver AI-driven recommendations directly into daily workflows and enables customers to make smarter and more informed decisions. This development is expected to be a differentiator in the field and should add real value to the industry.
In the same month, the company announced a multi-year contract with argenx SE to support the clinical development of new indications for VYVGART™ for the treatment of myasthenia gravis in adult patients. Through this development, IQV is expected to bring together scientific expertise and unique technology to accelerate the development and commercialization of innovative products that improve patient lives.
For its fiscal fourth quarter, ended Dec. 31, 2021, IQV’s revenue increased 10.2% year-over-year to $3.64 billion. Its income from operations grew 60.2% from its year-ago value to $463 million. Its net income attributable to IQV for the quarter stood at $318 million, reflecting a 167.2% increase year-over-year, while its EPS was $1.63, up 167.2% year-over-year.
IQV’s revenue for the quarter ended March 31, 2022, is expected to be $3.54 billion, indicating 3.8% year-over-year growth. The company’s EPS is expected to increase 10.8% year-over-year to $2.42 for the same quarter. IQV also beat the consensus EPS estimates in the trailing four quarters.
The stock has slumped 8% in price over the past month to close the last trading session at $206.73.
IQV’s fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
IQV has an A grade in Growth. It is ranked #11 of 48 stocks in the Medical - Diagnostics/Research industry.
In addition to the POWR Rating grades I have just highlighted, one can see the IQV’s ratings for Momentum, Stability, Sentiment, Quality, and Value here.
F5, Inc. (FFIV)
FFIV provides multi-cloud application security and delivery solutions to customers for the security, performance, and availability of network applications, servers, and storage systems. The company is headquartered in Seattle, Wash.
In February, FFIV announced the expansion of its application security and delivery portfolio with F5 Distributed Cloud Services that will provide multi-cloud networking, edge-based computing solutions, and security to the digital world. This product should expand the company’s portfolio of software and cloud offerings along with fulfilling its mission of securing organizations from cyberattacks.
FFIV’s income from operations increased 39.5% year-over-year to $74.65 million in its fiscal second quarter, ended March 31, 2021. Its net income grew 30.1% from its year-ago value to $56.24 billion, while its net income per share came in at $0.92, up 31.4% from the prior-year quarter.
Analysts expect FFIV’s EPS for the fiscal quarter ending September 2022 to come in at $3.08, indicating a 2.4% increase year-over-year. Also, the company’s revenue is expected to grow 9.1% year-over-year to $744.27 million in the same period. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
FFIV’s shares have slumped 20.8% in price year-to-date to close the last trading session at $193.91.
FFIV’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system.
FFIV is rated A in Quality and a B in Growth and Value. It is ranked #5 of 61 stocks in the Software - Business industry.
To see additional POWR Ratings for Momentum, Stability, and Sentiment for FFIV, click here.
VMware, Inc. (VMW)
VMW is a Palo Alto, Calif-based information technology company that develops and applies virtualization technologies. It offers multi-cloud, networking, digital workspace, and intrinsic security solutions. The company also has strategic alliances with Amazon Web Services to develop and deliver an integrated hybrid solution.
On April 20, 2022, VMW and Alibaba Cloud announced their collaboration to deliver next-generation public cloud service to accelerate digital innovation. Alibaba Cloud VMware Service will enable enterprises to migrate workloads to the cloud and reduce operational costs seamlessly. VMW’s partnership with Alibaba Cloud, which is one of the leading providers of public cloud services in China, is expected to be strategically beneficial for the company.
VMW also recently announced the availability of the company's cross-cloud services on Microsoft's MSFT Azure Marketplace, one of the most comprehensive marketplaces available. This is expected to help VMW’s customers accelerate application modernization and migrate workloads to the cloud in an efficient and cost-effective manner. The collaboration should expand VMW’s customer base and bolster its revenue growth.
VMW’s total revenue increased 7.2% from the prior-year quarter to $3.53 billion in its fiscal fourth quarter, ended Jan.28, 2022. Its subscription and SaaS revenue for the quarter came in at $868 million, reflecting a 22.8% increase year-over-year, while the combination of subscription and SaaS and license revenue stood at $1.90 billion, up 11% year-over-year.
The Street expects VMW’s revenue for the current quarter, ending April 30, 2022, to be $3.19 billion, indicating a 6.5% increase year-over-year. Also, the company’s revenue is expected to grow 7% year-over-year to $13.75 billion in its current fiscal year. It has an impressive earnings surprise history; it topped the Street’s EPS estimates in each of the trailing four quarters.
The stock has slumped 7.6% in price year-to-date to close the last trading session at $107.03.
VMW’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system.
VMW has a B grade in Stability, Sentiment, Quality, and Value. It is ranked #1 of 61 stocks in the Software - Business industry.
Beyond what is stated above, we have also rated VMW for Momentum and Growth. Get all the VMW ratings here.
Click here to check out our Cloud Computing Industry Report for 2022
IQV shares were trading at $208.72 per share on Wednesday morning, up $1.99 (+0.96%). Year-to-date, IQV has declined -26.02%, versus a -11.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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