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Model N (MODN) to Post Q1 Earnings: What Lies In Store?

Model N Inc.MODN is scheduled to report first-quarter fiscal 2017 results on Feb 6. Last quarter, the company posted loss of 26 cents that was in line with the Zacks Consensus Estimate. Moreover, the loss figure was narrower than 29 cents reported in the previous quarter but wider than 18 cents posted in the year-ago quarter.

Notably, the stock has beaten the Zacks Consensus Estimate in three of the preceding four quarters with an average positive earnings surprise of 6.87%.

However, positive earnings surprise has failed to provide any momentum to the share price in the past one year. While the Zacks Internet Software industry has gained 9.9%, Model N lost 16.5% in the same period.

Let's see how things are shaping up for this announcement.

Factors to Consider

Model N provides revenue management solutions for life science and technology industries. It develops applications such as managed care and government pricing for life science companies and channel incentives based on design wins for technology companies. The company has a strong clientele that includes the likes of Boston Scientific, Microchip, Amgen, Applied Micro and others.

We are optimistic about the company's strategic acquisitions (Revitas), product launches and deal wins (Shionogi, Sobi, Sesotec) to positively impact results in the to-be-reported quarter. Moreover, the expanded partnership with salesforce.com CRM will help the company in rapidly expanding its customer base.

However, sluggish transition rate from on-premise to cloud and ongoing consolidation in the technology sector are anticipated to hurt results. Moreover, pricing pressure caused by stiff competition from SAP, I-Many Inc. and Symphony Teleca Corp. may impact profitability in the near term.

Earnings Whispers

Our proven model does not conclusively show that Model N is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP : The Earnings ESP for Model N is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 29 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank : Model N currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions.

Model N, Inc. Price and EPS Surprise

Model N, Inc. Price and EPS Surprise | Model N, Inc. Quote

Stocks to Consider

Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:

Applied Optoelectronics AAOI with an Earnings ESP of +15.87% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Pure Storage PSTG with an Earnings ESP of +4.17% and a Zacks Rank #2.

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Salesforce.com Inc (CRM): Free Stock Analysis Report

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Model N, Inc. (MODN): Free Stock Analysis Report

Pure Storage, Inc. (PSTG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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