2 potential benefactors of the evolution of the labor market by TipRanks
© Reuters. 2 potential benefactors of the evolution of the labor market
The job market is changing. Most of us know about the labor shortage and how professionals prioritize free time for less than 12 hour office days with lucrative salaries.
The job market actually started to change before COVID-19. Companies have gradually reduced their workforce as industries have become more specialized. Nowadays, companies tend to outsource a large part of their tasks to subcontractors / freelancers with a specific set of skills.
The data provided by the Union des freelancers consolidates the argument; the Union projects that 50.9% of the US labor market will be self-employed by 2027.
The changing labor market presents opportunities for intermediaries such as Fiverr (FVRR) and Upwork (NASDAQ 🙂 to grow their businesses. I am bullish on both stocks.
Fiverr is a global marketplace. The platform allows service providers to sell their services to willing buyers at agreed prices.
Fiverr topped its second-quarter revenue estimate after posting $ 75.3 million in revenue, which is a 59.7% year-over-year improvement. Active users increased 43%, spend per buyer increased 23%, and participation rate increased 80 basis points.
Key financial indicators indicate that the stock is on a good counter. Free cash flow and working capital have increased over the past year, both exceeding industry benchmarks.
Analysts expect EPS to rise 143.8% by December 2023, reflecting optimism about the trajectory of shareholder value.
Wall Street remains bullish on the action, with four unanimous buy ratings. The average FVRR price target of $ 220.50 suggests upside potential of 5.9%.
Upwork is similar to Fiverr, but is considered intended for professionals skilled in larger tasks with longer durations, while Fiverr outsources smaller, more manageable tasks.
Needham analyst Bernie McTernan recently upgraded Upwork to a purchase with a target price of $ 57. According to McTernan: “SEM / SEO optimization in ’19, a realignment of the sales force in ’20 to focus on the business and the addition of more products like the successful launch of the project catalog in 1Q21 “are the reasons why he finds the risk-reward ratio of the stock attractive. .
Upwork reported second quarter revenue of $ 124.2 million, a 41.9% year-over-year improvement. The forecast for the third quarter has been revised upwards, with revenue now expected to range between $ 125 million and $ 127 million, from a previous estimate of $ 124.5 million. Adjusted EBITDA between $ 4 million and $ 5 million is also expected.
Wall Street believes the stock is a strong buy, with an average price target set at $ 67.50, based on four unanimous buys. The UPWK average price target represents an upside potential of 31.5%.
The growth of the industry will support these two titles, as they established themselves as key players early on.
The determining factor for the future is what they end up doing with their money.
Disclosure: At the time of publication, Steve Gray Booyens had a long position on FVRR.
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