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Medallia (MDLA) Moves 9.7% Higher: Will This Strength Last?

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Medallia shares soared 9.7% in the last trading session to close at $27.49. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 9% loss over the past four weeks.

The increase in share price can be attributed to the company’s strong first quarter fiscal 2022 top line performance.

Medallia reported fiscal first quarter revenues of $131.4 million that beat the Zacks Consensus Estimate by 3.2%. The top line increased 17% on a year-over-year basis driven by strength in subscription revenues as well as increases in mid-market and new enterprise clients. Subscription revenues jumped 19% to $106.1 million in the quarter under review.

Also, the company projected fiscal second quarter revenues to be between $137 million and $139 million, indicating year over year growth of 19-20%.

Price and Consensus

Price Consensus Chart for MDLA

This company is expected to post quarterly loss of $0.04 per share in its upcoming report, which represents a year-over-year change of -500%. Revenues are expected to be $135.13 million, up 17% 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 Medallia, 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 MDLA 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 >>>>

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