QAD shares ended the last trading session 19.4% higher at $87.05. 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 2% gain over the past four weeks.
The upswing came after the cloud manufacturing and supply chain solutions provider revealed that it has inked an agreement to get acquired by private equity investment firm Thoma Bravo in an all-cash transaction worth $2 billion.
Per the agreement, Thoma Bravo will pay $87.50 for each QAD’s share. The agreed equity price reflects a premium of 20% to QAD stock’s Jun 25 closing price of $72.90.
This enterprise software developer is expected to post quarterly earnings of $0.26 per share in its upcoming report, which represents a year-over-year change of +44.4%. Revenues are expected to be $81.68 million, up 10.3% 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 QAD, the consensus EPS estimate for the quarter has been revised 81.8% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on QADA 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 >>>>