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DigitalOcean (DOCN) Moves 8.1% Higher: Will This Strength Last?

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DigitalOcean Holdings, Inc. (DOCN - Free Report) shares rallied 8.1% in the last trading session to close at $35.53. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 11.7% loss over the past four weeks.

DOCN is benefiting from strong spending in the cloud computing domain. Annual Run-Rate Revenue (ARR) ended the quarter at $730 million, representing 11% year-over-year growth.

This company is expected to post quarterly earnings of $0.38 per share in its upcoming report, which represents a year-over-year change of +35.7%. Revenues are expected to be $182.7 million, up 10.6% 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 DigitalOcean, 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 DOCN 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 >>>>

DigitalOcean is part of the Zacks Internet - Software industry. VTEX (VTEX - Free Report) , another stock in the same industry, closed the last trading session 0.1% lower at $7.41. VTEX has returned -8.3% in the past month.

VTEX's consensus EPS estimate for the upcoming report has changed -50% over the past month to -$0.03. Compared to the company's year-ago EPS, this represents a change of +25%. VTEX currently boasts a Zacks Rank of #3 (Hold).


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