The computer hardware industry is expected to continue growing due to unabating remote working trends and digital transformation. So, Wall Street analysts expect hardware stocks Desktop Metal (DM), Markforged (MKFG), and Quantum (QMCO) to rally in price significantly in the near term. Thus, we think it could be wise to add these stocks to one’s watchlist.
The demand for personal computers (PCs), laptops, and tablets has skyrocketed amid the COVID-19 pandemic. According to Gartner, Inc.’s (IT) research report, worldwide PC shipments totaled 71.6 million units in the second quarter of 2021, representing a 4.6% year-over-year increase.
With several companies delaying their employees’ return to offices due to the resurgence of the COVID-19 cases, the demand for computer hardware is expected to increase in the coming months because they play a crucial role in facilitating remote work. In addition, an ongoing digital transformation should drive the demand for computer hardware. While the global chip shortage continues to impact the computer hardware industry, government and private-sector initiatives to boost semiconductor production should address this concern.
Given this backdrop, Wall Street analysts expect computer hardware stocks Desktop Metal, Inc. (DM), Markforged Holding Corporation (MKFG), and Quantum Corporation (QMCO) to rally more than 70% in price in the coming months. So, it could be wise to add these stocks to one’s watchlist now.
Desktop Metal, Inc. (DM)
DM manufactures and sells additive manufacturing solutions, such as its Production System, Shop System, Studio System, and Fiber. In addition, the Burlington, Mass.-based concern makes 3D printing accessible to all engineers, designers, and manufacturers with the help of its solutions. The company serves various industries, including automotive, aerospace, healthcare, consumer products, and heavy industry.
On September 9, DM acquired Aidro, a pioneer in the volume production of next-generation hydraulic and fluid power systems through metal additive manufacturing (AM). The acquisition is expected to help DM expand its product portfolio with the help of Aidro’s industry-leading AM 2.0 technology portfolio.
DM’s total revenue increased 766.9% year-over-year to $18.98 million for its fiscal second quarter, ended June 30, 2021. The company’s gross profit was t $2.37 million, versus an $8.29 million loss in the year-ago period. Its non-GAAP net loss came in at $21.40 million, versus $22.53 million in the prior-year quarter.
For its fiscal year 2021, analysts expect DM’s revenue to be $101.06 million, representing a 513.6% year-over-year rise. In addition, the company’s EPS is expected to increase 61.4% year-over-year in fiscal 2021.
The stock has lost 6.5% in price over the past month to close yesterday’s trading session at $7.83. However, Wall Street analysts expect the stock to hit $13.75 in the near term, which indicates a potential 75.6% upside.
Markforged Holding Corporation (MKFG)
Industrial additive manufacturing provider MKFG offers end-to-end metal and carbon fiber 3D printers, 3D printers for continuous fiberglass reinforced parts, and refined FFF 3D printers for micro carbon fiber-filled nylon parts. In addition, it offers four fibers: carbon fiber, fiberglass, kevlar, and high-strength high-temp (HSHT) fiberglass. MKFG is in Watertown, Mass.
MKFG introduced its Eiger Fleet on September 13. It is a cloud-based software solution that is designed to accelerate the adoption of additive manufacturing operations at scale. The company’s CTO and co-founder, David Benhaim, said, “Eiger Fleet fuels the expansion of additive manufacturing by giving our customers the right set of control and management tools that address the concerns of security, quality management, auditing or user error.”
MKFG’s total revenues increased 44.1% year-over-year to $20.42 million in the second quarter, ended June 30, 2021. Its gross profit came in at $11.92 million, representing a 60% year-over-year rise. In addition, its total liabilities were $24.60 million for the period ended June 30, 2021, compared to $27.58 million for the period ended December 31, 2020.
Analysts expect MKFG’s revenue to grow 40.3% year-over-year to $121.64 million in fiscal 2022. Likewise, its EPS is expected to grow 7.1% year-over-year in fiscal 2022.
The stock has lost 19.8% in price over the past month to close yesterday’s trading session at $7.56. However, Wall Street analysts expect the stock to hit $13.17 in the near term, which indicates a potential 74.2% upside.
Quantum Corporation (QMCO)
QMCO focuses on scale-out storage, archive, and data protection, providing solutions for capturing, sharing, managing, and preserving digital assets over the entire data lifecycle. The San Jose, Calif., company’s offerings include StorNext software systems, Scalar tape systems, and DXi backup systems.
On August 26, QMCO agreed to acquire the assets of EnCloudEn, an early stage hyperconverged infrastructure (HCI) software company. This proposed acquisition is expected to help QMCO expand the addressable market for its video surveillance portfolio.
For its fiscal first quarter, ended June 30, 2021, QMCO’s net revenue increased 21.5% year-over-year to $89.10 million. The company’s gross profit came in at $37.28 million, up 20.8% year-over-year. Its net loss decreased 61.3% year-over-year to $4.15 million. Also, its loss per share was $0.07, representing a 74.1% year-over-year decline.
QMCO’s revenue is expected to be $426.08 million in its fiscal year 2023, representing a 9.6% year-over-year rise. The company’s EPS is expected to increase 233.3% year-over-year to $0.30 in the next year. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters.
The stock has lost nearly 8% in price over the past month to close yesterday’s trading session at $5.07. However, Wall Street analysts expect the stock to hit $12 in the near term, which indicates a potential 136.7% upside.
DM shares rose $0.01 (+0.13%) in premarket trading Wednesday. Year-to-date, DM has declined -54.48%, versus a 19.76% 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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