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New Relic Stock Rose 15% after Its Strong Q4 Results

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New Relic (NYSE:NEWR) stock gained around 15% in pre-market today at 8:27 AM ET. The technology company released its results for the fourth quarter of fiscal 2020 after the market closed on Thursday. Notably, the quarter ended on March 31, 2020. New Relic stock rose after the company beat analysts’ top and bottom-line expectations in the fourth quarter.

Q4 earnings results

New Relic generated revenue of $159.66 million—an increase of 20.9% from the fourth quarter of fiscal 2019. The cloud software company beat analysts’ consensus revenue expectation of $153.48 million. In the fourth quarter, New Relic reported an adjusted EPS of $0.14 compared to $0.13 in the fourth quarter of fiscal 2019. The earnings beat analysts’ consensus estimate of $0.03 per share.

In the first quarter of fiscal 2021, New Relic expects sales between $158 million and $160 million. The company also expects its adjusted EPS to be -$0.01–$0.04 for the first quarter.

In the fourth-quarter earnings release, New Relic CEO Lew Cirne said, “I am excited about our future; over the last two months, we have seen our customers prioritize digital, the cloud, and operational resiliency, and we are committed to helping them meet their goals with the strongest product lineup in our company’s history.” He added, “I’d like to acknowledge how difficult COVID-19 has been for everyone, and I’d like to recognize the extraordinary resiliency we’ve seen from our customers and our employees as we come together and rise to the challenge.”

Wall Street analysts expect New Relic to report an adjusted EPS of $0.05 on revenue of $160.14 million in the first quarter. Currently, analysts expect a 12.5% and 17.7% rise in the company’s fiscal 2021 and 2022 sales, respectively. Analysts also expect an adjusted EPS of $0.29 and $0.66 in fiscal 2021 and 2022, respectively.

Analysts’ recommendations for New Relic stock

Among the 17 analysts following New Relic stock, ten recommend a “buy,” five recommend a “hold,” and two recommend a “sell.” Wall Street analysts’ mean target price on the stock is $69.64, which implies a 20% gain from the current level of $58.28. The consensus target price for the stock has risen from $66.50 in April—a rise of 4.7%.

Many analysts revised their target price for New Relic stock after its fourth-quarter earnings report on Thursday.

  • Oppenheimer increased its target price from $65 to $70.
  • BMO increased its target price from $53 to $70.
  • Rosenblatt Securities increased its target price from $45 to $65.
  • Needham increased its target price from $74 to $79.
  • Cowen and Company increased its target price from $70 to $75.
  • Baird increased its target price from $58 to $75.
  • Morgan Stanley increased its target price from $50 to $70.

Stock returns

New Relic stock rose 3.1% on Thursday and ended the day at $58.28. At this closing price, the company’s market cap is $3.5 billion. Notably, the stock is trading 42.8% below its 52-week high of $101.82 and 74.0% above its 52-week low of $33.49.

Based on the closing price on Thursday, New Relic stock was trading 8.9% above its 20-day moving average of $53.53. The stock is also trading 18.8% above its 50-day moving average of $49.06 and 2.4% above its 100-day moving average of $56.91. New Relic’s 14-day relative strength index number is 61. The number indicates that the stock is approaching the overbought level.

On Thursday, the Dow Jones and the S&P 500 rose by 1.6% and 1.2%, respectively. To learn more, read Goldman Sachs Warns about a US Stock Market Crash.

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