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Strength Seen in Aspen Technology (AZPN): Can Its 5.6% Jump Turn into More Strength?

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Aspen Technology (AZPN - Free Report) shares soared 5.6% in the last trading session to close at $189.20. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.2% loss over the past four weeks.

The increase in share price can be attributed to the improving spending environment. The company is well-poised to gain from its diversified product portfolio especially its asset optimization and management software solutions and Asset Performance Management (or “APM”) suite.

Driven by strong performance Aspen Technology expects revenues in the range of $737-$754 million for fiscal 2022.

The integration of Emerson’s OSI Inc. and Geological Simulation Software (“GSS”) businesses bodes well for Aspen. OSI specializes in optimizing transmission and distribution networks for utility companies in the power industry. The integration will aid Aspen to develop its transmission and distribution offering to support power grid modernization and ensure grid reliability.

Aspen can also cross-sell its current products to industrial customers due to increased exposure to the utilities and power market. Emerson’s GSS business, which will be known as Subsurface Science and Engineering (“SSE”), provides a comprehensive solution for oil and gas supply-chain links. By moving OSI and the GSS business to a subscription-based business model, Aspen is expected to derive considerable revenue and synergy opportunities.

This software maker is expected to post quarterly earnings of $2.20 per share in its upcoming report, which represents a year-over-year change of +43.8%. Revenues are expected to be $273.76 million, up 38.3% 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 Aspen Technology, the consensus EPS estimate for the quarter has been revised 1.9% 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 AZPN going forward to see if this recent jump can turn into more strength down the road.

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

Aspen Technology is part of the Zacks Internet - Software industry. Qualtrics International (XM - Free Report) , another stock in the same industry, closed the last trading session 2.8% higher at $11.83. XM has returned -24.2% in the past month.

Qualtrics' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.01 Compared to the company's year-ago EPS, this represents a change of 200%. Qualtrics currently boasts a Zacks Rank of #3 (Hold).

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