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Strength Seen in New Relic (NEWR): Can Its 10.8% Jump Turn into More Strength?

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New Relic (NEWR - Free Report) shares ended the last trading session 10.8% higher at $83.84. 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 1.5% gain over the past four weeks.

The upswing came after the Wall Street Journal, citing people familiar with matter, reported that private-equity firms Francisco Partners and TPG are working together to acquire the software company. The daily newspaper stated that a deal could be reached out in next few weeks.

This cloud-based software analytics company is expected to post quarterly earnings of $0.22 per share in its upcoming report, which represents a year-over-year change of +191.7%. Revenues are expected to be $241.02 million, up 17.1% 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 New Relic, 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 NEWR 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 >>>>

New Relic is part of the Zacks Internet - Software industry. KANZHUN LIMITED Sponsored ADR (BZ - Free Report) , another stock in the same industry, closed the last trading session 2.6% lower at $17.80. BZ has returned 1.1% in the past month.

For KANZHUN LIMITED Sponsored ADR, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.22. This represents a change of +450% from what the company reported a year ago. KANZHUN LIMITED Sponsored ADR currently has a Zacks Rank of #2 (Buy).

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