Post-pandemic tech stocks: Winners and losers

Covid-19 remains a deadly scourge in many parts of the world. And supply chains everywhere are still a mess.

But in countries like the US and the UK, where more than half of adults have now received their first jab – and others like Australia and NZ that have remained islands of relative calm throughout – the “old normal” is starting to reassert itself.

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  • Orion Health’s Ian McCrae sees tens of millions in overspend on vaccine register, flawed procurement

Even Big Tech remote-work boosters like Google are now preparing for the return of staff to their offices.

Which tech stocks will thrive in the new environment?

Here’s how five could fare.

Fisher & Paykel Healthcare

F&P Healthcare has more than doubled in value since 2019 to a $20.7 billion market cap – making it easily the most valuable company on the NZX. With revenue up 73 per cent over the first nine months of its 2021 financial year, F&P Healthcare has upgraded its forecast several times and now expects net profit to top $400m (from$287.3m in 2020, which was itself up, up 37 per cent over 2019).

The $64,000 question is, of course, will demand for its respiratory products continue after the pandemic subsides? Forsyth Barr analysts Chelsea Leadbetter and Matt Montgomerie leant strongly “yes” on that point in a March 17 note. The pair argue that the outbreak has provided a unique opportunity to dramatically broaden exposure to F&P’s Healthcare’s high-flow oxygen products – which they see establishing a long-term position for frontline therapy post-pandemic.

Sam Dickie, senior portfolio manager at Fisher Funds – which has a large stake in the respiratory products – makes a similar argument. “The bears will tell you that all the hardware that they have sold will gather dust in the cupboard once Covid eventually is brought under control,” he said. But Dickie added that by proving itself in the heat of the Covid emergency, F&P Healthcare had gained a wider foothold outside of intensive care, too. Then there is the home care market, where F&P sells CPAP (continuous positive airway pressure) machines to address sleep apnea. An army of snorers has been put on the back burner during the pandemic (in NZ’s public health system, a waiting list for an initial consultation sleep apnea has blown out to 14 months) but should return to being a high-growth area as hospitals worldwide eventually return to business as normal.

Leadbetter and Montgomerie say F&P has “a material runway of growth opportunity ahead.” But they also caution that the stock, with its heady price-to-earnings multiple, is now trading in line with its peer group. They saw nearly all that growth opportunity built into F&P when it was priced at $31.20, and gave it a neutral rating and a 12-month target price of $32.50. In the two months since, F&P has again defied expectations, jumping to $35.95 despite no further trading updates.

Vista Group

Vista Group, the Auckland-based company that dominates the global market for movie theatre management software, had a horror show 12 months to December 31, 2020, reporting a $56.7m loss (from a year-ago profit of $10.8m) as revenue crashed 39 per cent to from $144m to $87.5m.

The pandemic, of course, emptied cinemas, and choked Hollywood’s production line. But it also forced Disney and other big studios to accelerate their experiments with direct-to-the-consumer streaming for new-release titles – with unexpected success that strongly hinted at a long-term shift in delivery post-pandemic. Disney signed up more than 100m households to Disney plus in little over a year, and says it’s aiming for more than 250m by 2024.

Yet the pandemic also provided a chance for Vista to reset its cost structure, and even at the very depths of the pandemic, its chairman Kirk Senior argued that people would ultimately return to multiplexes because we are inherently social creatures, whatever home streamers might offer (Vista has covered its bets by partnering with another NZ company, Shift 72, to create a white-label service for theatres that want to offer their own streaming platform, but the product is still in its infancy with a handful of customers.).

More recently, chief executive has been able to take Senior’s instinctive, emotional argument – all that the chairman had to go on, at the time -and add some hard facts. In some markets, cinema attendance is now close to pre-pandemic levels, even with Hollywood yet to return to full-throttle output. In China in the New Year, it was actually ahead.

And Riley argues that because it’s not a given that 100 per cent of punters will return – and that there are often rules like chequerboard seating when they do – theatre owners have more incentive to buy Vista’s various pieces of management and marketing software.

Investors have noticed. Vista shares have now recovered from their 2020 trough of 91.5c to a recent $2.37 (for a market cap of $560m). But they’re still some distance shy of Vista’s pre-pandemic high of $5.91.


Few tech stocks fell harder than Serko as Covid closed borders. The maker of corporate travel-booking and expense-management software plunged from $5.78 to 89c between the first Covid-19 stories out of China in the New Year of 2020 and airports worldwide emptying out in March.

Co-founder and chief executive Darrin Grafton always argued his Auckland-based company could tough it out. Even as Serko nosedived to a $10 million full-year loss, the CEO argued it was cushioned by a $67m raise, wrapped up in September, and an earlier $17.5m cornerstone investment from US giant that meant Serko had $90m cash on hand.

More, Grafton added that the investment in Serko opened the door for the Kiwi company to partner with the US giant (the Nasdaq-listed has a market cap of just over US$100m. Serko would look to leverage’s expertise in areas like hotel booking, and sell its service, on a white-label basis, to the Nasdaq giant’s partners – which would represent a huge step to expanding Serko’s northern hemisphere business (its traditional strength has been in the Australian fly-in, fly-out market or “fifo” market).

For the best part of a year, it seemed like a whiteboard goal, but in March, close to bang-on the first anniversary of his company’s coronavirus nadir, Grafton could officially announce that his company’s Xeno cloud platform will also be sold as for business.

Australian domestic travel rebounded soon after. And of course we’ve just seen the transtasman bubble finally open.

The big question: even once the pandemic completely disappears, how many companies will be happy with the Zoom meeting lifestyle they’ve adopted during the pandemic.

A recent study of 1000 business people, commissioned by 2degrees, found that 48 per cent of decision-makers thought their business had suffered from lack of face-to-face interaction over the past 12 months. But even in that boosterish environment (the telco was looking to promote a new transtasman roaming offer), that’s still a minority.

Nevertheless, while videoconferencing can be good for maintaining or extending new business, it’s harder yakka for creating new contacts, and winning new contracts. The Herald has spoken to many business people recently who have been itching to get back on international flights.

Investors agree. Serko shares have roared back since March to recently hit an all-time high of $6.80.

Grafton says material benefits from the deal won’t kick in until FY2022, however. The mild-mannered CEO, so underestimated by shareholders around this time last year, says he’ll update further when Serko’s full-year results are delivered on May 19.


The NZX-listed, Seattle-based maker of digital giving and church management software more than doubled its market cap to $2.3b during 2020.

If the faith sector, like so many others, the pandemic accelerated digitisation. With no plate to pass during a real-life service, congregations who had reconvened on Zoom adopted Pushpay.

But in an April 9 note, Forsyth Barr’s Jamie Foulkes – a former Pushpay bull – seemed to have lost his faith. The analyst, who downgraded the company to underperform, said it had blown its chance to capitalise on its market dominance during the pandemic.

“Instead, our recent research suggests that over the past twelve months Pushpay has lost significant ground to its competition, with growing its churches by 12,000 [in the first half of FY2021] while Pushpay grew by 309.”

Foulkes said the premium-price Pushpay was losing out to lower-cost opposition (Tithely is one third of the price), reducing its market share in large congregations from 58 per cent to 52 per cent over the year to March.

Pushpay, which has made nearly all of its revenue so far from Protestant churches in the US, has recently said it sees Catholic congregations as an area for growth.

However, unlike when it began in the Protestant segment, Pushpay faces an incumbent in that market: the Nasdaq-listed Blackbaud. And Foulkes notes the situation is further complicated by the fact that a lot of Catholic giving is funnelled through Catholic schools.

Pushpay shares have recently pulled back, not helped by the fact that Foulkes’ research came on the heels of the Huljich family selling the remainder of its cornerstone stake, and the company announcing its third CEO in 24 months as the Seattle-based Molly Matthews took the reins in an internal promotion.

Despite the backlash factors, Pushpay’s shares have suffered only a modest pullback (the stock was recently trading at $1.83 for a $2.0b market cap). The company is still forecasting aggressive growth, and emphasising that it has moved well beyond its digital tithing roots with software that can manage communications and every facet of running a congregation.

Rocket Lab

If you have some play money to spare, then Rocket Lab’s pending Nasdaq listing – target ting a US$4.1b valuation – could be, well, a bit of a blast, particularly with the new generation of retail investing platforms that give Kiwi investors access to US markets.

Rocket Lab has told potential investors its revenue will increase from US$69m this year to US$1.6b by 2027 as it swings from a US$48m loss to a projected US$505b profit – with a big jump after its much larger Neutron rocket first lifts off in 2024.

There is a glut of more than 100 satellite launch start-ups – far too many for but a faction to survive, even with demand for satellites booming. But Rocket Lab is the only private operator beyond Space X (private equity value: US$74b) to have achieved a regular launch schedule.

And while Elon Musk is a formidable competitor, Rocket Lab’s largest customer – the US government – has a history of leveraging its aerospace bets. It suits Uncle Sam to be able to play-off two rivals.

A Rocket Lab investor presentation says the Neutron will be “Tailored for commercial and DoD [US Department of Defence] constellation launches.” That kind of promotion of Rocket Lab’s longtime, close US military ties will make Green Party toes curl, but could also well guarantee a steady pipeline of work.

That said, for all his phenomenal achievements, founder Peter Beck has a history of missing ambitious deadlines (if all had gone to his plan outlined in 2019, Rocket Lab would now be on a launch-per-fortnight cycle). Once publically listed, they won’t be so easily waved away. And we’re very deep into Musk territory when a founder has pet side-projects such as Beck’s dream of exploring the upper atmosphere of Venus.

A high-risk investment, but also one that promises to be a rollicking ride.

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