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Here's Why Model N (MODN) is a Promising Portfolio Pick
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Shares of Model N, Inc. (MODN - Free Report) have surged 55% over the past six months, driven by improved market demand across its portfolio on the back of a flexible business model and solid cash flow. Earnings estimates for the current fiscal year have increased 66.1% over the past year while that for the next fiscal year is up 36.6% since February 2022, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Growth Drivers
San Mateo, CA-based Model N provides revenue management solutions for life sciences and technology companies, including applications for configure, price, quote, rebates management and regulatory compliance. The company is accelerating its transition of revenue management to the cloud and is making steady progress in its transformation to a Software-as-a-Service (SaaS) based business model.
Model N's spring 2022 product release for the Model N Revenue Cloud fueled channel efficiencies in the High-Tech vertical and further enhanced the automation and compliance for the Life Science vertical. In addition, Model N’s prospects in the Life Sciences and High Tech vertical are bright owing to the increasing ineffectiveness of legacy systems.
Companies using legacy systems like spreadsheets are increasingly finding it difficult to keep pace with the current industry trends that include shorter product lifecycles, strict compliance & regulatory controls, and growing volumes of transactional data. We believe that Model N’s cloud-based revenue management solutions are well suited to address the current unique needs of these industries. The company’s solutions provide higher Return on Investment (ROI) and plug gaps in the end-to-end revenue management process that legacy systems fail to do. This improves top-line growth of the companies, in turn boosting the adoption of Model N’s solutions.
Model N has significant growth opportunities in the underpenetrated revenue management market as it continues to replace legacy processes that are labor-intensive, error-prone, inflexible and costly. Its solutions are particularly suitable for manufacturing and financial services. Its Revenue Cloud transforms the revenue lifecycle into a strategic, end-to-end process aligned across the enterprise, while its industry-specific solution suites – Revenue Cloud for Life Sciences and Revenue Cloud for High Tech – offer a range of solutions from individual products to complete product suites.
The company reported strong fourth-quarter fiscal 2022 results, with both the bottom line and top line beating the respective Zacks Consensus Estimate driven by the successful transition to a SAAS platform as part of its transformation to a cloud company. With a healthy contribution from all of its growth levers, the company ended fiscal 2022 on a positive note and expects this momentum to continue in the impending quarters as well.
It delivered a positive earnings surprise of 61.5%, on average, in the trailing four quarters. The stock has a VGM Score of B.
Other Key Picks
TESSCO Technologies Incorporated , sporting a Zacks Rank #1, delivered an earnings surprise of 126.1%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 44.3% since November 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Harmonic Inc. (HLIT - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 48.6% since March 2021.
Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.
AudioCodes Ltd. (AUDC - Free Report) , sporting a Zacks Rank #1, is likely to benefit from the secular tailwinds related to IP-based communications. Incorporated in 1992 and headquartered in Lod, Israel, it offers advanced communications software, products and productivity solutions for the digital workplace. It has a long-term earnings growth expectation of 9%.
AudioCodes aims to leverage its long-term partnership with Microsoft to further strengthen its market position. It is also likely to benefit from its continued focus on high-margin businesses.
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Here's Why Model N (MODN) is a Promising Portfolio Pick
Shares of Model N, Inc. (MODN - Free Report) have surged 55% over the past six months, driven by improved market demand across its portfolio on the back of a flexible business model and solid cash flow. Earnings estimates for the current fiscal year have increased 66.1% over the past year while that for the next fiscal year is up 36.6% since February 2022, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Growth Drivers
San Mateo, CA-based Model N provides revenue management solutions for life sciences and technology companies, including applications for configure, price, quote, rebates management and regulatory compliance. The company is accelerating its transition of revenue management to the cloud and is making steady progress in its transformation to a Software-as-a-Service (SaaS) based business model.
Model N's spring 2022 product release for the Model N Revenue Cloud fueled channel efficiencies in the High-Tech vertical and further enhanced the automation and compliance for the Life Science vertical. In addition, Model N’s prospects in the Life Sciences and High Tech vertical are bright owing to the increasing ineffectiveness of legacy systems.
Companies using legacy systems like spreadsheets are increasingly finding it difficult to keep pace with the current industry trends that include shorter product lifecycles, strict compliance & regulatory controls, and growing volumes of transactional data. We believe that Model N’s cloud-based revenue management solutions are well suited to address the current unique needs of these industries. The company’s solutions provide higher Return on Investment (ROI) and plug gaps in the end-to-end revenue management process that legacy systems fail to do. This improves top-line growth of the companies, in turn boosting the adoption of Model N’s solutions.
Model N has significant growth opportunities in the underpenetrated revenue management market as it continues to replace legacy processes that are labor-intensive, error-prone, inflexible and costly. Its solutions are particularly suitable for manufacturing and financial services. Its Revenue Cloud transforms the revenue lifecycle into a strategic, end-to-end process aligned across the enterprise, while its industry-specific solution suites – Revenue Cloud for Life Sciences and Revenue Cloud for High Tech – offer a range of solutions from individual products to complete product suites.
The company reported strong fourth-quarter fiscal 2022 results, with both the bottom line and top line beating the respective Zacks Consensus Estimate driven by the successful transition to a SAAS platform as part of its transformation to a cloud company. With a healthy contribution from all of its growth levers, the company ended fiscal 2022 on a positive note and expects this momentum to continue in the impending quarters as well.
It delivered a positive earnings surprise of 61.5%, on average, in the trailing four quarters. The stock has a VGM Score of B.
Other Key Picks
TESSCO Technologies Incorporated , sporting a Zacks Rank #1, delivered an earnings surprise of 126.1%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 44.3% since November 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Harmonic Inc. (HLIT - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 48.6% since March 2021.
Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.
AudioCodes Ltd. (AUDC - Free Report) , sporting a Zacks Rank #1, is likely to benefit from the secular tailwinds related to IP-based communications. Incorporated in 1992 and headquartered in Lod, Israel, it offers advanced communications software, products and productivity solutions for the digital workplace. It has a long-term earnings growth expectation of 9%.
AudioCodes aims to leverage its long-term partnership with Microsoft to further strengthen its market position. It is also likely to benefit from its continued focus on high-margin businesses.