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Strength Seen in SecureWorks (SCWX): Can Its 20.4% Jump Turn into More Strength?

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SecureWorks (SCWX - Free Report) shares soared 20.4% in the last trading session to close at $8.73. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 5.8% loss over the past four weeks.

SecureWorks’ shares appreciated following an exclusive report by Reuters stating that its parent company, Dell Technologies, is exploring a possible sale of the cybersecurity firm. Citing people familiar with the matter, Reuters revealed that Dell has hired investment bankers at Morgan Stanley and Piper Sandler to look for potential buyers for SecureWorks.

This information security services provider is expected to post quarterly earnings of $0.01 per share in its upcoming report, which represents a year-over-year change of +110%. Revenues are expected to be $80.98 million, down 12.9% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For SecureWorks, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SCWX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

SecureWorks is part of the Zacks Computers - IT Services industry. SAIC (SAIC - Free Report) , another stock in the same industry, closed the last trading session 0.6% higher at $129.22. SAIC has returned 3.3% in the past month.

SAIC's consensus EPS estimate for the upcoming report has changed -1% over the past month to $1.86. Compared to the company's year-ago EPS, this represents a change of -9.3%. SAIC currently boasts a Zacks Rank of #4 (Sell).


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