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Why Cloudera Stock Jumped Today

By Evan Niu, CFA – Jun 3, 2020 at 4:36PM

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The data analytics company received an upgrade from Morgan Stanley.

What happened

Shares of Cloudera (CLDR) have jumped today, up by 10% as of 3 p.m. EDT, after receiving an upgrade from Wall Street. The stock is now trading at 52-week highs.

So what

Morgan Stanley boosted its rating on Cloudera from equal weight (equivalent to a neutral) to overweight (equivalent to a buy), and analyst Sanjit Singh increased his price target from $8 to $14. The business is starting to stabilize following its merger with Hortonworks, which closed in January 2019, and the company can now focus on product development.

Employees at Cloudera headquarters

Image source: Cloudera.

"Stabilizing execution post merger with Hortonworks, a major product cycle and an inflection to positive cash flow combine with low expectations and an attractive valuation at 3.6x [calendar year 2021] sales to form an attractive risk-reward," Singh wrote in a research note to investors.

Now what

The analyst is encouraged by the data analytics company's execution over the past two quarters, which have shown that Cloudera can deliver on major product milestones. The company launched the Cloudera Data Platform last September, and Morgan Stanley argues it will strengthen Cloudera's position in the intensely competitive market for data management software. The offering should help maintain momentum and sustain growth through fiscal 2022.

Even though Cloudera faces macroeconomic risks related to the COVID-19 pandemic, Singh believes that investors have already priced in those uncertainties at current levels. Cloudera reports fiscal first-quarter 2021 results tomorrow after the close, and Wall Street is looking for $204.6 million in revenue.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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