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The Hartford Financial Services Group authorized a new share buyback program worth $1.5 billion. The investment and insurance company said that the new program will be effective from Jan. 1, 2021 to Dec. 31, 2022.

Hartford Financial (HIG) will start buying back shares after reporting 4Q earnings results.

Following the share buyback announcement, Wells Fargo analyst Elyse Greenspan maintained a Buy rating and a price target of $50 (6.9% upside potential) on the stock. The analyst said, “We think the shares should respond favorably to the announcement, which confirms they will be back repurchasing their shares in early 2021. We expect this authorization is about in line with consensus expectations.”

Greenspan further added, “We think the company’s valuation (trading right at book value and at only 8.3x 2021 earnings) is not giving it credit for its strong underlying businesses, especially within commercial lines as we are in a hard commercial lines market (in the majority of business lines excluding workers’ compensation) and is discounting the stock for potential Covid-19 business interruption losses that we do not think will materialize.” (See HIG stock analysis on TipRanks)

Meanwhile, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 4 Buys and 3 Holds. The average price target stands at $51.43 and implies upside potential of about 9.9% to current levels. Shares declined about 23% year-to-date.

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Remote working and rapid migration to the cloud since the pandemic have immensely benefited the so-called “work-from-home” stocks like Zoom Video, DocuSign, Okta, Zscaler and CrowdStrike. After touching all-time highs, some of the work-from-home stocks took a hit on the news of COVID-19 vaccine success.  

Some analysts believe that these companies will continue to benefit from secular trends like increased cloud adoption. That said, the sales growth rates are expected to moderate. Bearing in mind the current uncertainty due to rising COVID-19 cases, we will use TipRanks' Stock Comparison tool to stack up Okta against DocuSign and see which stock the Street thinks has further upside potential.

Okta (OKTA)

Okta is a cloud-based identity management platform that enables companies to manage and verify users’ identities before granting them the right level of access to workplace systems and information.

The demand for the company’s identity platform is helping in winning new customers and driving increased sales from the existing customers. In 3Q FY21, Okta’s revenue grew 42% to $217.4 million, and the company flipped to an adjusted EPS of $0.04 from an adjusted loss per share of $0.03.

The company now boasts 1,780 customers (34% year-over-year rise) with annual contract value (ACV) of $100,000. What’s more, customers with an ACV greater than $500,000 grew over 50% to 320 in 3Q. Large enterprise customers now make up 80% of Okta’s annual ACV.  

Canaccord Genuity analyst Michael Walkley believes that Okta’s strong results demonstrated its ability to win larger enterprise customers as reflected by another quarter of triple-digit net additions of customers with ACV of over $100,000.

Walkley increased his price target to $250 from $218 and stated, “Okta is the category leader in the Access Management security software market that is benefiting from the pandemic driving increases in remote workforces and demand for Identity Access Management (IAM) solutions. Longer term, work-from-home should settle at higher levels, and along with accelerations in digital transformation and cloud computing, cybersecurity demand will continue to increase accordingly.”

Though the analyst is impressed with Okta’s fundamentals, execution and market position, he continues to be on the sidelines due to valuation concerns. Reiterating a Hold rating on Okta, Walkley concluded, “With the stock trading over 30x EV/Sales on C2021 estimates, we believe patient investors might have a better opportunity at a more favorable risk/reward level.” (See OKTA stock analysis on TipRanks)

The rest of the Street has a cautiously optimistic Moderate Buy analyst consensus, backed by 9 Buys and 5 Holds. Given the stellar year-to-date rise of 135.3%, the average price target of $266 implies a possible downside of 2% from current levels.

Looking ahead, Okta predicts revenue growth of 40% in FY21 and expects to cross the milestone of $1 billion in FY22. Okta has now teamed up with Amazon Web Services to bring the Okta Identity Cloud to AWS Marketplace, thus gaining access to an extensive potential customer base while further integrating its identity solutions with AWS.  

DocuSign (DOCU)

DocuSign, with a market share of 71% (as per Datanyze), is a dominant player in the e-signature space, with closest rivals like SignNow, RightSignature and Adobe Sign each holding less than 6% of the market share.

However, DocuSign has more to offer than its flagship e-signature product, which is a part of its broader Agreement Cloud offering. Agreement Cloud includes a suite of products like the DocuSign CLM (contract life management), which helps in automating the entire agreement lifecycle from end-to-end.

Customers are realizing the need for e-signature and DocuSign’s other cloud-based solutions for managing agreements as they are embracing digital transformation in the current work-from-home environment. Earlier this month, the company reported a 53% increase in its 3Q FY21 revenue to $383 million on robust subscriptions. Adjusted EPS doubled to $0.22.

Furthermore, the number of customers with greater than $300,000 in annual contract value in billings increased 35% year-over-year to 542. (See DOCU stock analysis on TipRanks)

After gaining a strong position in the domestic market, the company is now eyeing further international expansion. DocuSign’s international revenue grew 77% in 3Q and accounted for 20% of total revenue. Overall, the company gained nearly 73,000 new customers in the quarter, bringing its total customer base to 822,000. The company’s guidance now indicates over 46% revenue growth in FY21.   

Following the 3Q results, Oppenheimer analyst Koji Ikeda reiterated a Buy rating with a $300 price target, as he believes that the company’s performance cemented its position as a disruptor in the digital future of work.

“We believe the F3Q results are a salient proof point that not only is DocuSign being viewed as mission critical to keep business operations flowing during the pandemic; but more importantly, as a strategic technology for the new digital future of work, which should drive strong installed-base monetization trends and new logo acquisition for the foreseeable future,” summarized Ikeda.

Overall, DocuSign scores the Street’s Strong Buy analyst consensus based on 10 Buys versus 3 Holds. With shares rising by a staggering 233.3% year-to-date, the average price target of $276.46 indicates upside potential of 12% over the coming year.    

Bottom line

Okta’s future looks very promising due to the robust demand for its identity-management solutions, while DocuSign is well-positioned to grow with its Agreement Cloud suite and dominance in the e-signature market. Right now, both stocks are trading at lofty valuations. However, DocuSign appears to be a better pick as the Street feels it still has further upside ahead.   

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment

BlackBerry Limited reported better-than-expected 3Q results. The enterprise software provider posted adjusted earnings of $0.02 per share, comparing favorably to analysts’ expectations of a loss of $0.01 per share. However, its quarterly earnings experienced a year-over-year decline of 33.3%.

BlackBerry’s (BB) 3Q non-GAAP revenues fell 20% to $224 million year-on-year. However, it came in ahead of the Street's estimates of $219.7 million. The company said that the year-over-year top-line decline was mainly due to lower Licensing revenues.

Notably, the company's Software and Services business unit impressed. Although the segment’s revenues fell on a year-over-year basis, it registered improvement sequentially. (See BB stock analysis on TipRanks)

BlackBerry CEO John Chen said, “We are pleased to report solid financial results this quarter, delivering sequential software and services revenue growth in line with our outlook. This quarter we delivered exciting new technology releases, especially our AI-driven BlackBerry Cyber Suite. We also made significant progress with partnerships."

Ahead of its earnings release, RBC Capital analyst Paul Treiber raised the stock’s price target to $7.50 (9.2% downside potential) from $5, while reiterating a Hold rating. In a note to investors on Dec. 15, Treiber pointed out that the recent rally in its share price reflects investors’ eagerness for a value stock and was not because of improving expectations for 3Q results. The analyst cautioned that BlackBerry’s fundamental challenges limit the scope for further valuation multiple expansion.

Overall, the Street is sidelined on the stock. The Hold analyst consensus is based on 3 Holds. The average price target stands at $6.96 and implies downside potential of about 15.7% to current levels. Shares have gained 28.7% year-to-date.

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AAR shares fell 4.7% in after-hours trading on Thursday after it reported a year-on-year decline of 28% in its Q2 consolidated sales of $403.6 million. It missed Street estimates by $5.82 million. The pandemic-induced weak sales to commercial customers caused the decline, which was partially offset by strength from sales to government customers.

AAR (AIR) EPS declined by 52% to $0.31, but beat analyst estimates by $0.14.

The CARES Act payroll support and improved operating efficiencies contributed towards gross profit margin expansion, from 15.3% to 17.2%, for the global aerospace and defense aftermarket solutions company.

Cash flow from operating activities improved to $27.6 million, from $19.9 million in the year-ago period.

AAR won a five-year contract worth $148.4 million from the Naval Air Systems Command towards contractor logistics services during the quarter. The company also announced multi-year partnerships with Fortress Transportation and Infrastructure Investors, Honeywell, Viasat, and Airinmar.

"We expect the combination of our improved operating efficiency, growth from new business wins, and the commercial market recovery will continue to drive margin expansion,” said John M. Holmes, CEO of AAR.

The stock price has lost 23.2% year-to-date and is trading at a discount of 34.4% to its 52-week high. (See AIR stock analysis on TipRanks)

Canaccord Genuity analyst Kenneth Herbert reiterated a Buy rating on AAR on Tuesday, setting a price target of $40. This target implies that investors could be reaping a 16% gain over the coming 12 months.

Herbert expects AAR to post a Q4 net loss per share of $0.42. The company reported a net loss per share of $0.43 in the year-ago period.

From the rest of the Street, the stock scores a Strong Buy analyst consensus based on 3 Buys and 1 Hold. The average price target of $32.25 implies a downside potential of close to 7% to current levels.

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Shares of United States Steel Corporation dropped 6.3% in Thursday’s extended trading after the integrated steel producer projected a 4Q loss that exceeded analysts’ expectations.

U.S. Steel (X) expects to report a loss per share of $0.85 in 4Q, significantly higher than the Street estimates of a loss of $0.56 per share as well as the year-ago quarter’s loss of $0.64. Meanwhile, it anticipates adjusted EBITDA of approximately $55 million.

Nevertheless, the company is experiencing improved demand across the US and European markets. United States Steel CEO David B. Burritt said, "Flat-rolled customer demand in the U.S. and Europe has improved throughout the fourth quarter, fueled by consumer-driven end-markets such as automotive, appliance, and packaging." (See X stock analysis on TipRanks)

Burritt further added, "December’s performance has been particularly strong driven by the flow-through of higher steel prices, more nimble operations, and a continued focus on cost management. As a result, we have line of sight to significantly improved financial performance in 2021. Longer lead times, higher utilization rates, and higher input costs reflect current healthy steel demand and make us optimistic about the sustainability of today’s market environment."

On Dec. 9, Morgan Stanley analyst Carlos De Alba initiated coverage on United States Steel with a Hold rating and price target of $17 (8.4% downside potential). Alba believes that the company is likely to benefit in the near-term from momentum in steel prices, but cautioned that capacity additions might start pressuring prices in the second half of 2021.

Overall, the Street is sidelined on the stock. The Hold analyst consensus is based on 2 Holds, 2 Buys and 2 Sells. The average price target stands at $9.86 and implies downside potential of about 46.9% to current levels. Shares have gained 62.7% year-to-date.

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