Zoom is zooming, but this Health-Tech stock is doing even better

The stock market managed to post some gains to start the new week, even though major market benchmarks ended well after their highs for the day. The Nasdaq composite (^IXIC) led the way higher with gains of more than half a percent, but the S&P 500 (^GSPC 0.31%) And Dow Jones Industrial Average (^DJI 0.22%) had to settle for smaller increases on Monday.

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After the closing bell, however, some stocks rallied on positive financial results. Particularly shares of Zoom video communication (ZM -0.28%) were particularly strong performers, posting solid gains as investors looked for the video conferencing specialist to bounce back. And an even bigger rise in the shares of a health technology company Progyny (PGNY 1.70%) made people aware of a company that many have not followed closely.

The show continues for Zoom

Shares of Zoom Video Communications were up 8% in after-hours trading on Monday. The mainstay of pandemic-era communications stocks reported fourth-quarter fiscal results for the period ended Jan. 31, giving investors more confidence in its ability to continue moving forward.

Zoom’s numbers showed solid growth, albeit at rates nowhere close to what the video communications specialist has achieved in recent years. Total sales increased 4% year over year to $1.12 billion, ending a year of 7% sales growth.

Adjusted net income was 7% lower than last year’s level of $367 million, but a decline in the number of shares limited the drop in adjusted earnings per share, which came in at $1.22. Adjusted full-year 2023 earnings of $4.37 per share were about 14% lower than final fiscal year 2022 bottom-line numbers.

Zoom saw more strength in its business segment, which has proven crucial as casual users haven’t been as loyal to the service as several businesses and social venues have reopened. Zoom served 213,000 business customers, up 12% from 12 months ago, and those customers had a net dollar growth rate of 115%.

Zoom has 3,471 customers who contribute at least $100,000 annually to revenue, up 27% from the same period a year ago. Enterprise segment revenue was up 18% for the quarter and 24% for the full year, demonstrating that Zoom’s overall strategy is still right.

Investors seemed to like Zoom’s fiscal 2024 outlook, even though it predicted revenue growth of just 1% and adjusted earnings to fall to between $4.11 and $4.18 per share. However, now that the stock has fallen from its highs, much of the slowdown is already reflected in the share price, which could warrant greater optimism about Zoom’s long-term prospects.

Progyny looks healthy

Meanwhile, shares of Progyny were up 14% in after-hours trading. The provider of fertility and family benefits solutions experienced tremendous revenue growth in 2022, and investors were pleased with these gains and bottom line results.

Progyny’s numbers were generally good. Revenue of $214 million was 68% higher than a year ago. While net income fell sharply, adjusted pre-tax operating income of $33 million was more than double what Progyny posted in the fourth quarter of 2021.

Both Progyny’s Fertility Benefits and Pharmacy Benefits divisions showed impressive growth rates and customer numbers increased by more than half over the past 12 months, as the company served nearly 4.56 million members by the end of 2022.

Progyny believes macroeconomic trends will continue to support its growth through 2023. For the full year, the company hopes to break the $1 billion mark in revenue, posting earnings of $0.26 to $0.32 per share and a significant jump in adjusted pre-tax operating income. Margin expansion also looks promising.

Last year was not good for Progyny’s shares, but investors are hoping the tide will turn for the company. Based on the most recent results and the outlook, it could finally give shareholders the results they’ve been looking for.

Dan Caplinger has positions at Zoom Video Communications. The Motley Fool has positions in and recommends Progyny and Zoom Video Communications. The Motley Fool has a disclosure policy.






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