It is not easy for firms to beat estimates in today’s toxic business environment. In particular, there is an ongoing trade between the world’s economic giants as well as volatile interest rates. Despite all the gloom, Coupa Software Inc (NASDAQ:COUP) reported positive numbers in the latest earnings report.
Numbers all rosy for Coupa Software Inc (NASDAQ:COUP)
The third-quarter fiscal 2019 report is basically an up-vote for the operational decisions taken in the previous quarters. Further, it is an indictment of the company’s strategic moves including the vision to transform B2B payments.
Notably, the company announced increased revenues by 42% compared to the similar quarter last year. Particularly, the surge in revenue is as a result of the increased subscriptions the company experienced.
Coupa offers cloud services to hundreds of enterprise customers. Further, the firm boasts a global supply base in the region of 4 million. Usually, customers access the firm’s services via subscription.
Increased subscriptions earned the firm about $60.6 million. In addition, other revenues from the professional services segment netted $6.9 million.
Coupa added more customers during the third quarter including United Airlines, KPMG Canada and AAA Club Alliance. As a result, most of the reported revenue came from the subscriptions due to the expanded customer base.
Performance of the share price
Investors reacted to the positive earnings report with increased activity on the demand side. In the immediate aftermath of the report, the shares went up 6.8%. Interestingly, this outperforms the 6.5% industry-wide rally.
Looking at the MA (50) and the MA (200), they represent different narratives regarding the stock’s price. First, the MA (200) indicates a trend that could soon lead to sub-50 territory for the stock price. In particular, it establishes a resistance at $64.95.
On the other hand, the 50-day moving average, MA (50), tells a different story. According to the indicator, Coupa’s stock price is likely to find support at $59.78. However, it depicts an overall trend that is positive.
The lack of consensus for the two indicators could be as a result of the recent fluctuations that settled at $60.99. However, the stock price has a favourable pivot stock price of 62.712.
Source: StockCharts.com
Forecast
Already, recent earnings indicate a stubbornness of revenue that is beating estimates. Like earlier mentioned, the recent revelation of revenue earned beats all the estimates analysts presented. As a result, the stock price is likely to perform better.
Regardless of the MA (200) in the chart above, it is possible for the stock to hit $70and above soon. Particularly, the consensus 12-month price forecasts for the stock present a favourable target.
Interestingly, many knowledgeable observers agree that the median target for the firm for the coming 12 months is $84.00. Also, the highest probability estimate is $92.00 with the bottom being $54.00.
Source: CNN Business
Further, the firm is positioning itself for more growth in the coming months. The company is building reputation especially with the recent recognition by Deloitte.
Although it is not the first time Coupa is appearing in Deloitte’s Technology Fast 500™ list, the recognition is strategic.
Coupa’s chief executive officer, Rob Bernshteyn believes the recognition is deserved.
“This designation is further validation that our mission to empower businesses everywhere to spend smarter is working. With Coupa, our global customers are achieving greater visibility and control over their business spend and improving compliance and risk management,” Bernshteyn said.
This is an important development that no serious investor should miss. Particularly, the developments will create more market confidence in the company’s growth strategy. As a result, the stock will experience heightened demand, hence increased stock price.