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What's in Store for Castlight (CSLT) this Earnings Season?

Castlight Health, Inc.CSLT is set to report third-quarter 2017 results on Oct 25. Notably, the company has a pretty decent record of earnings surprises with an average positive surprise of 44.5% in the trailing four quarters. Last quarter, the company came up with a positive surprise of 30%.

Loss of 11 cents per share in the second quarter was much narrower than the year-ago loss of 17 cents per share. Revenues increased 36% year over year to $32.1 million and also surpassed the Zacks Consensus Estimate of $31 million. Management noted that increased product launches and higher rate of adoption were the primary growth catalysts.

Growth Catalysts

Castlight's software platform that assists organizations in gaining control over their health care costs is witnessing rapid adoption. This is evident from the top-line growth of the company. Moreover, the company expects renewals to boost the company's annualized recurring revenues (ARR).

The Zacks Consensus Estimate for Professional Services segment revenues is around $2.3 million while that for Subscription revenues is about $31.8 million.

The company's strategic acquisition of Jiff has enhanced its solutions portfolio, thereby improving its customer base via cross-selling of the products. In the third quarter, Castlight added Pickerington School District to its clientele.

Castlight Health, inc. Price and EPS Surprise

Castlight Health, inc. Price and EPS Surprise | Castlight Health, inc. Quote

Notably, the company's new mobile application launched in May has also contributed to growth. Additionally, channel partnerships, like the one with Anthem, are also proving to be strong tailwinds Management stated that with a focus on product and packaging execution, demand generation and proper sales and marketing services, "Anthem Engage" is expected to be a key growth driver for the company in the near to long term.

We believe all these factors to be key catalysts for the company's third-quarter results. The Zacks Consensus Estimate for third-quarter revenues is pegged at $34 million while loss estimates stand at 7 cents per share, indicating a sequential improvement.

Zacks Rank & Stocks to Consider

Castlight currently has a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Applied Materials, Inc. AMAT , NVIDIA Corporation NVDA and Vishay Intertechnology, Inc. VSH , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The long-term earnings growth rate for Applied Materials, NVIDIA and Vishay Intertechnology is projected to be 17.1%, 10.3% and 20.6% respectively.

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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

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Castlight Health, inc. (CSLT): Free Stock Analysis Report

NVIDIA Corporation (NVDA): Free Stock Analysis Report

Vishay Intertechnology, Inc. (VSH): Free Stock Analysis Report

Applied Materials, Inc. (AMAT): 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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