Buy Cheap Tech Stock Yext as a Bet on Information Overload?

Buy Cheap Tech Stock Yext as a Bet on Information Overload?


Yext (NYSE:) YEXT provides a relatively simple, yet vital service at a time when nearly all information is available digitally. The tech company helps its clients ensure that their digital footprints provide accurate factual information about their businesses or organization.

Yext stock has climbed roughly 100% since early April and even though it trades for under $20 a share, it still rests well below its 2018 highs. Yext shares have also jumped during the last several sessions heading into its third quarter earnings release that’s due out after the market closes on Thursday, December 3.

Staying on Brand & Message

Yext aims to help businesses provide people with “dynamic answers and clear calls-to-action wherever they search.” The firm, which went public in 2017, also aims to reduce “data discrepancies, manual work, and support costs across your teams and internal systems.”

The ability to consistently provide the most up-to-date and accurate information about a business for questions as simple as where’s the nearest location and far beyond, is important in an age that is overrun with information across an array of platforms and sources, such as search engines, virtual assistants, and social media.

Yext and its “Search Experience Cloud” have amassed some big-name clients like Marriott MAR and Taco Bell YUM. Yext also announced a partnership with Adobe (NASDAQ:) ADBE in May. More recently, Yext expanded its site search product, Yext Answers, into four new languages.

Other Fundamentals

The company’s fiscal 2020 revenue jumped 31% to $300 million, which came on top of FY19’s 34% expansion. Yext’s second quarter sales then popped 22%. Meanwhile, its Customer count, which excludes its small business and third-party reseller customers, jumped 27% to roughly 2,200.

Yext share have climbed by 100% since early April to crush our broader Business Services market’s 27% climb. This run includes a 16% jump in the past month. More broadly, the stock is up 16% in the last year and around 45% since its debut on the public markets.

The stock also popped 1.4% during regular trading Tuesday to close at $19.28 a share, or nearly 30% below its fall 2018 highs. Along with its under $20 a share price tag, Yext trades in line with its industry’s average at 5.4X forward 12-month sales.

Zacks estimates call for Yext’s third quarter sales growth to slow down, with it projected to climb by 14%. Meanwhile, it is expected to cut its adjusted quarterly loss from -$0.19 to -$0.08 a share.

Looking ahead, the company’s fiscal 2021 revenue is projected to jump by 19%, with FY22 projected to come in 22% higher to hit $431 million. Meanwhile, its adjusted loss is expected to shrink by $0.15 this year to -$0.33 and then be cut to -$0.24 in FY22.

Bottom Line

Yext has easily topped our bottom-line estimate in the trailing three quarters and the stock earns a “B” grade for Momentum in our Style Scores system. Investors should note that despite posting solid results last quarter, Yext stock went on to tumble, having been run up for a month straight in the lead up to its early-September release.

Interested investors might want to hold off until after its reports to see what its guidance looks like and how Wall Street reacts. That said, Yext appears to be worth watching as a cheap tech stock with solid upside potential in our world that is overloaded with information.

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