Selling tech stocks scared you? Here is a best buy.

Dalthough it beat analysts’ estimates in its most recent quarter, Doximity (NYSE: DOCS) the stock plunged further after earnings were released this week. As of this writing, shares of the healthcare networking technologist are down 43% so far in 2022.

However, Doximity is growing at a fast and steady pace and is highly profitable. Investors who love companies using technology to serve their customers but are rattled by selling the technology should spend some time getting to grips with Doximity. Here’s why this emerging healthcare leader is worth checking out right now.

Image source: Getty Images.

An excellent conclusion to the exercise

In the fourth quarter of its fiscal year 2022, which ended March 31, Doximity reported a 40% increase in revenue to $93.7 million, easily beating its own forecast of $90 million provided a while back. some months.

However you want to measure the health of a company’s bottom line – whether it’s an adjusted measure like EBITDA, free cash flow, or net income – Doximity has delivered over the course of of the last trimester.

Profitability indicator

3 months ended March 31, 2022

Change (YOY)

% of sales

Adjusted EBITDA

$39.4 million

48%

42%

Adjusted net income

$44.9 million

87%

48%

Net revenue

$36.7 million

71%

39%

Free movement of capital

$44.9 million

23%

48%

Data source: Doximity.

Doximity has done a fantastic job creating a marketing, recruiting and telehealth solutions center. It boasts of having top 20 hospitals and top 20 pharmaceutical companies as clients. It is now starting to grow among mid-sized companies in the space. As existing customers increase spending and new customers join the Doximity app, management was comfortable forecasting revenue growth of around 33% for the current fiscal year, while maintaining a margin lucrative adjusted EBITDA of around 43%.

Given the fantastic quarter and outlook, why is the market down on Doximity stock? It seems advice was the problem – specifically regarding the first quarter of the fiscal year. Although management expects full-year growth of 33%, first-quarter sales are expected to be between $88.6 million and $89.6 million. This represents a drop in revenue from the quarter just reported and only a 23% year-over-year increase in the middle of the forecast. Which give?

About business prospects…

The Doximity team noted on the company’s conference call with analysts that the company had “uncharacteristically high” revenue in the first quarter of last year due to a “significant increase in demand.”

William Blair analyst Ryan Daniels pointed out on the earnings call that before the pandemic, Doximity saw an 18% decline from the fourth quarter of fiscal 2019 to the first quarter of 2020, and this year, the sequential decline should only be around 5%. Chief Financial Officer Anna Bryson confirmed this and said revenue growth should accelerate through the rest of the year.

So, I don’t sweat Doximity’s growth tips. After the earnings update, the stock now trades at 43 times the price over last year’s earnings per share and 29 times the enterprise value over the adjusted EBITDA forecast for the year. ‘next year. Sweetening the deal, the board gave the green light to a $70 million share buyback program. Given the company’s high profit margins and $798 million in cash and short-term investments (and no debt!), stock buybacks seem like an excellent use of capital after the stock’s recent plunge.

In a market that has completely deteriorated on high-growth but low-to-no-profit technology stocks, Doximity stands out as a company capable of generating growth and abundant cash flow. And even at this early stage in its existence, this healthcare platform is returning some of that excess cash to shareholders. I believe this will be a winning combination in this time of extreme anxiety.

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Nicholas Rossolillo and his clients hold positions at Doximity, Inc. The Motley Fool holds positions and recommends Doximity, Inc. The Motley Fool has a Disclosure Policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Sallie R. Loera