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Cloudera’s Massive Stock Rally Might Fade Fast

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Cloudera (NYSE:CLDR) stock lost 11% in after-hours trading on Wednesday following its results for the first quarter of fiscal 2021 (quarter ended April 30). The software company posted better-than-expected first-quarter financial results. Cloudera’s earnings and sales numbers beat Wall Street’s consensus estimate. However, the shares fell after the company issued a weak revenue outlook for the second quarter.

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Cloudera’s Q1 earnings results

In the first quarter, Cloudera reported an adjusted EPS of $0.05 compared to -$0.13 in the first quarter of fiscal 2020. The earnings beat Wall Street’s consensus estimate of $0.00 per share. Cloudera generated revenues of $210.5 million—a growth of 12.3% from the first quarter of fiscal 2020. The software company beat Wall Street’s consensus revenue estimate of $204.6 million.

In the first quarter, subscription sales rose 20.8% YoY (year-over-year) to $187.1 million and accounted for 88.9% of the total revenues. The company’s annualized recurring revenues rose 11% YoY to $723.4 million as of April 30.

In the first-quarter earnings release, Cloudera CEO Rob Bearden said, “We executed extremely well in Q1, particularly as the pandemic was in full effect for more than half of our fiscal quarter.” He also said, “We believe that remote working environments have placed heightened importance on data, data analysis and data security, which has increased the value of data architecture design and the criticality of hybrid cloud solutions. In addition, CDP Public Cloud is accomplishing exactly what we had hoped in that it has enabled a hybrid multi-cloud architecture for our customers and enhanced our value proposition with customers who plan to take advantage of public cloud infrastructure for certain types of workloads.”

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Financial outlook

Cloudera provided a strong earnings outlook for the second quarter amid the coronavirus outbreak. In the second quarter of fiscal 2021, Cloudera expects total revenue of $206 million–$209 million. Meanwhile, the subscription revenue will likely be between $186 million and $189 million. The company also expects its non-GAAP EPS to be $0.06–$0.07 for the second quarter.

For fiscal 2021, Cloudera expects total revenue of $825 million–$845 million. The subscription revenue will likely be between $745 million and $755 million. The company also expects its non-GAAP EPS to be $0.26–$0.30 for fiscal 2021.

Wall Street analysts expected Cloudera to report an adjusted EPS of $0.05 on revenue of $213.2 million in the second quarter. Analysts expect Cloudera’s revenues to rise by 8.4% YoY in fiscal 2021 to $861.1 million. The sales could rise by 8.7% YoY in fiscal 2022 to $935.6 million. Cloudera’s adjusted EPS will likely increase from -$0.13 in fiscal 2020 to $0.23 in fiscal 2021. Analysts expect an adjusted EPS of $0.38 in fiscal 2022.

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Analysts’ recommendations for Cloudera

Among the 17 analysts tracking Cloudera stock, six recommend a “buy,” ten recommend a “hold,” and one recommends a “sell.” Wall Street analysts’ mean target price on the stock is $11.79, which implies a 4.9% loss from the current level of $12.40. The consensus target price for the stock has increased from $11.40 in May—a growth of 3.4%.

Stock returns

Cloudera stock rose 10.3% on Wednesday and ended the day at $12.40. At this closing price, the company’s market cap is $3.7 billion. Notably, the stock is trading 0.8% below its 52-week high of $12.50 and 160.5% above its 52-week low of $4.76.

Based on the closing price on Wednesday, Cloudera stock was trading 33.2% above its 20-day moving average of $9.31. The stock is also trading 47.1% above its 50-day moving average of $8.43 and 36.4% above its 100-day moving average of $9.09. Cloudera’s 14-day relative strength index number is 86, which indicates that it’s overbought.

Cloudera stock has a middle Bollinger Band level of $9.31, while its lower Bollinger Band level is $6.96. On Wednesday, Cloudera stock closed near its upper Bollinger Band level of $11.66, which indicates that it’s overbought.

On Wednesday, the Dow Jones Industrial Average and the S&P 500 rose 2.05% and 1.36%, respectively.

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