Multi-decade high inflation rates and aggressive rate hikes have kept the equity markets under pressure over the past few months. The volatile market backdrop is evident from the CBOE Volatility Index’s 50.4% gains year-to-date. Morgan Stanley’s Michael Wilson expects the benchmark S&P 500 index to slide 18% by mid-August this year.
Investors have been focusing on large-cap stocks to hedge their portfolios against the current market risks. Large-cap growth companies tend to have a versatile product portfolio and robust financials, allowing them to withstand uncertain market conditions better than relatively smaller companies.
Given the backdrop, Wall Street analysts expect fundamentally sound large-cap growth stocks Airbnb, Inc. (ABNB), CrowdStrike Holdings, Inc. (CRWD), and Datadog, Inc. (DDOG) to rally more than 56% in the near term.
Airbnb, Inc. (ABNB)
ABNB and its subsidiaries operate a platform that enables hosts to offer guest stays and experiences worldwide. The company's marketplace model connects hosts and guests online or through mobile devices to book spaces and experiences, and it primarily offers private rooms, primary homes, or vacation homes. Its market capitalization is $76.14 billion.
ABNB’s revenue came in at $1.51 billion for the first quarter ended March 31, 2022, up 70.1% year-over-year. Its cash and cash equivalents came in at $6.89 billion for the period ended March 31, 2022, compared to $6.07 billion for the period ended December 31, 2021. Also, its total current assets came in at $15.76 billion, compared to $12.39 billion for the same period.
ABNB has an impressive growth history, as its trailing-12-month revenue increased 93.2% year-over-year. Its trailing-twelve-month working capital grew at 37.5% year-over-year.
For fiscal 2022, analysts expect ABNB’s revenue to increase 37.5% to $8.24 billion. Its EPS is estimated to grow 447.4% to $1.98 in 2022. It surpassed EPS estimates in each of the trailing four quarters. The stock closed yesterday’s session at $120.87. Wall Street analysts expect the stock to hit $189.48 in the near term, which indicates a potential upside of 62%.
CrowdStrike Holdings, Inc. (CRWD)
CRWD provides cloud-delivered protection across endpoints and cloud workloads, identity, and data. It offers threat intelligence, managed security services, IT operations management, threat hunting, Zero Trust identity protection, and log management. Its market capitalization is $37.54 billion.
On March 9, 2022, Burt Podbere, CRWD’s CFO, said, “Our durable platform model and powerful innovation engine have translated into a truly differentiated offering in the market and strong momentum heading into fiscal year 2023. As we continue to capitalize on our unique market position, we firmly believe CrowdStrike's best days are ahead.”
For the fourth quarter ended January 31, 2022, CRWD’s total revenue increased 62.7% year-over-year to $431.01 million. Its non-GAAP net income came in at $70.40 million, up 123% year-over-year, while its non-GAAP EPS came in at $0.30, up 130.8% year-over-year.
CRWD’s revenues increased at a 79.8% CAGR over the past three years. Its trailing-twelve-month operating cash flow grew at 61.2% year-over-year.
CRWD’s revenue is expected to be $2.15 billion in fiscal 2023, representing a 48.4% year-over-year rise. The company’s EPS is expected to increase 70.1% per annum for the next five years. The stock closed yesterday’s session at $159.99. Wall Street analysts expect the stock to hit $255.62 in the near term, which indicates a potential upside of 56%.
Datadog, Inc. (DDOG)
DDOG provides a monitoring and analytics platform for developers, information technology operations teams, and business users in the cloud in North America and internationally. The company's SaaS platform integrates and automates infrastructure monitoring, application performance monitoring, log management, and security monitoring. Its market capitalization is $31.27 billion.
On May 5, 2022, Olivier Pomel, DDOG’s co-founder and CEO, said, “We continue to see customers of all sizes and in all industries progressing along their digital transformation and cloud migration journeys. By using our unified, cloud-native, end-to-end observability and security platform, our customers can understand, manage, and drive value from their exponentially growing and ephemeral cloud environments.”
For the quarter ended March 31, 2022, DDOG’s revenue increased 82.8% year-over-year to $363.03 million. Its non-GAAP net income came in at $83.84 million, up 316.1% year-over-year, while its non-GAAP EPS came in at $0.24, up 300% year-over-year.
The company’s revenues increased at a CAGR of 73.5% over the past three years. Its trailing-twelve-month operating cash flow grew 180.1% year-over-year.
Analysts expect DDOG’s revenue to increase 56.9% to $1.61 billion in 2022. Its EPS is estimated to increase 54.2% to $0.74 in 2022. It surpassed EPS estimates in each of the four trailing quarters. The stock has gained 4.8% over the past year to close yesterday’s trading session at $95.39. Wall Street analysts expect the stock to hit $164.72 in the near term, which indicates a potential upside of 68%.
ABNB shares were trading at $117.13 per share on Wednesday afternoon, down $3.74 (-3.09%). Year-to-date, ABNB has declined -29.65%, versus a -13.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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