When it rains, it pours. A market scorned for tech stocks, in general, has been particularly rough on the biotechnology industry and a slew of companies that provide software as a service (SaaS).
Wall Street analysts who follow these companies don't think they've lost their sparkle. The average target on each one is still at least 30% above their recent prices.
If you're already holding these stocks in your portfolio, now could be a good time to average down. If you missed the boat the first time around, here's another chance to get in at a relatively low price.
1. Veeva Systems
Veeva Systems (NYSE:VEEV) stock fell about 22% over the past month. Now, this stock is around 27% below the peak it reached over the summer.
Wall Street analysts are expecting a swift rebound for Veeva Systems in 2022. The consensus price target for this stock represents a 30% premium over recent prices.
Veeva Systems is a cloud service provider to the biopharmaceutical industry. Fiscal third-quarter earnings results came in slightly above expectations, but analysts on Wall Street have gotten used to this company beating estimates by a wide margin.
A couple of quarters with less than amazing financial results hardly seem like a reason to avoid this well-positioned SaaS stock. The biopharmaceutical industry increasingly relies on Veeva Systems' suite of subscription-based services.
Customer relationship management is just the tip of the spear for Veeva Systems. Its subscribers can also warehouse waves of data thrown off in the course of developing new drugs in a way that helps them meet the expectations of regulators all over the world.
Despite the recent drop, Veeva Systems' stock isn't exactly cheap. The shares have been trading at around 68 times the company's earnings expectations for the year. With super sticky subscriber revenue, though, this stock has a good chance to grow into its valuation.
2. Global-E Online
Shares of international e-commerce facilitator Global-E Online (NASDAQ:GLBE) shot up after its IPO this spring, but the gains didn't last long. The stock's down around 31% from the peak it reached in early September.
The average analyst following Global-E Online expects it to bounce right back. The consensus price target suggests around 36% of upside ahead for this provider of end-to-end international e-commerce services.
Despite the sell-off, Global-E Online stock still looks pricey at 32.6 times trailing sales. Expectations are high, but a recent partnership deal with Shopify (NASDAQ:SHOP) gives Global-E Online a chance to grow past its optimistic valuation.
A majority of Shopify merchants operate out of North America, but they don't sell to countries on different continents nearly as often as they would like to. The tie-up gives Global-E Online access to around 1.7 million Shopify merchants eager to reach a larger audience.
3. Twist Bioscience
Twist Bioscience (NASDAQ:TWST) is a DNA synthesis leader that has fallen around 40% over the past month. Investment bank analysts who follow the company think it can recover those losses soon. The consensus target for Twist Bioscience is around 38% higher than its recent price.
At its peak this year, Twist Bioscience's market cap rose past $10 billion. During the company's fiscal year ended Sept. 30, 2021, total revenue reached just $132.3 million. That was an impressive 16% gain over the previous year, but hardly enough to justify such an enormous valuation.
Copying a strand of DNA that already exists isn't nearly as difficult as it used to be. Accurately producing totally new bits of DNA code at scale, though, is usually prohibitively expensive. Twist Bioscience's proprietary DNA synthesis platform allows the company to synthesize DNA at a fraction of the cost of its nearest competitor, and its lead is expanding.
Producing custom DNA strands to help drugmakers develop new drugs is Twist Bioscience's largest source of revenue at the moment, but it's probably just the tip of the iceberg. Twist Biosciences is doing for DNA synthesis what Microsoft's Windows operating system did for personal computers in the 1990s.
Since DNA is relatively stable over long periods of time, data storage is one potential new application. It's hard to know exactly what direction Twist Biosciences' customer base will expand in. We can be sure that patient investors who buy this high-growth stock now are in for an interesting ride.