On Nov 27, we upgraded
) to Outperform based on its improved prospects. Compuware Corp
focuses on software and services, for the information technology
(IT) industry worldwide. The company became a Zacks Rank #2 (Buy)
stock based on improving fundamentals.
Why the Upgrade?
Compuware reported second quarter fiscal 2014 earnings of 9
cents per share, which beat the Zacks Consensus Estimate by 3
cents. Earnings (including stock-based compensation and related
tax effect) jumped 49.6% from the year-ago quarter and 31.8% from
the previous quarter. The strong earnings growth was primarily
driven by lower cost and improving margins.
Following the release of second quarter 2014 results, the
Zacks Consensus Estimate for third quarter has gone up 9.1% to 12
cents per share over the last 30 days. Moreover, the Zacks
Consensus Estimate for fiscal year 2014 and 2015 has gone up 2.7%
and 4.3%, respectively over the same period.
What is the cause for the strong positive bias on the
Compuware's growth story looks compelling. Moreover, as per
the latest report released by industry research firm IDC in Aug
2013, IT spending in Western Europe is expected to increase
significantly at a compound annual growth rate of 7.4% over the
2012-2017 period. We believe, this is going to benefit Compuware
Management provided a modest revenue growth outlook for the
upcoming quarter. We believe that the ongoing restructuring plan
will benefit the company's profitability going forward. Moreover,
the debt repayment measures implemented by the company will help
it in the long run.
Additionally, strategic partnership and acquisitions will also
boost top-line and edge out competition in the long run. These
are reasons, which compel us to upgrade our recommendation from
Neutral to Outperform.
Other Stocks to Consider
Besides Compuware, other stocks worth considering in the
technology sector include
) having a Zacks #1 Rank (Strong Buy) and
Qihoo 360 Tech Co Ltd.
) having a Zacks #2 Rank (Buy).
COMPUWARE CORP (CPWR): Free Stock Analysis
NETFLIX INC (NFLX): Free Stock Analysis
QIHOO 360 TECH (QIHU): Free Stock Analysis
SANDISK CORP (SNDK): Free Stock Analysis
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