Zoom is zooming, but this health tech stock is doing even better

The stock market managed to post gains to start the new week, although major market benchmarks ended well off their highs for the day. THE Nasdaq Compound (^IXIC) led the way with gains of over half a percent, but the S&P500 (^GSPC 0.31%) And Dow Jones Industrial Average (^ DJI 0.22%) had to settle for smaller increases on Monday.


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Data source: Yahoo! Finance.

After the closing bell, however, positive financial results lifted some stocks. In particular, the actions of Focus on video communications (ZM -0.28%) have been a particularly strong performer, posting strong gains as investors wait for the video conferencing specialist to rebound. And an even bigger rise in the health tech company’s stock Progyny (PGNY 1.70%) introduces a company that many have not followed closely.

The show goes on for Zoom

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

Zoom’s numbers have shown solid growth, albeit at rates still far from what the video communications specialist has achieved in recent years. Total revenue increased 4% year over year to $1.12 billion, capping a year of 7% sales growth.

Adjusted net income was 7% below year-ago levels at $367 million, but a decline in the number of shares limited the decline in adjusted earnings per share to $1.22 . Adjusted earnings of $4.37 per share for fiscal 2023 were down about 14% from final fiscal 2022 numbers.

Zoom saw more strength in its enterprise segment, which proved crucial as casual users weren’t as loyal to sticking with the service as various businesses and social venues reopened. Zoom served 213,000 enterprise customers, up 12% from 12 months ago, and those customers saw a net dollar expansion rate of 115%.

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

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

Progynia looks healthy

Meanwhile, Progyny shares rose 14% in after-hours trading. The fertility solutions and family benefits provider saw massive revenue growth in 2022, and investors appreciated those gains as well as its earnings performance.

Progyny’s numbers were generally good. Revenue of $214 million was up 68% from prior year levels. Even though net profit fell sharply, adjusted pretax operating profit of $33 million was more than double what Progyny had recorded in the fourth quarter of 2021.

Progyny’s fertility benefits and pharmacy benefits divisions have both posted impressive growth rates, and customer numbers have more than halved in the past 12 months, with the company serving nearly 4.56 million members at the end of 2022.

Progyny believes macroeconomic trends will continue to support its growth through 2023. For the full year, the company expects to cross the $1 billion revenue mark, with earnings of $0.26 to $0.32. per share and a significant increase in adjusted operating income before taxes. Margin expansion also looks promising.

The past year has not been kind to Progyny shares, but investors are hoping the tide is turning for the company. Based on its most recent results and outlook, it could finally give shareholders the results they’ve been waiting for.

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

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