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Model N (MODN) Surges 5.3%: Is This an Indication of Further Gains?

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Model N shares ended the last trading session 5.3% higher at $23.59. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 5.8% loss over the past four weeks.

Model N is increasingly benefiting from solid growth opportunities in the revenue management market, as it continues to replace legacy processes that are labor intensive, error prone, inflexible and costly. Its cloud-based revenue management solutions are well suited to address the unique needs of industries that possess shorter product lifecycles, require strict compliance & regulatory controls and feature higher volumes of transactional data. The company’s solutions provide higher Return on Investment (ROI) as well as plug gaps in the end-to-end revenue management process that legacy systems fail to do.

This provider of revenue management services to the life science and technology industries is expected to post quarterly earnings of $0.29 per share in its upcoming report, which represents a year-over-year change of +26.1%. Revenues are expected to be $62.12 million, up 5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Model N, the consensus EPS estimate for the quarter has been revised 220% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on MODN going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Model N is a member of the Zacks Internet - Software industry. One other stock in the same industry, Paylocity (PCTY - Free Report) , finished the last trading session 5.1% higher at $161.87. PCTY has returned 2.7% over the past month.

For Paylocity, the consensus EPS estimate for the upcoming report has changed -0.5% over the past month to $1.21. This represents a change of +8% from what the company reported a year ago. Paylocity currently has a Zacks Rank of #3 (Hold).


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