What happened
Shares of Alteryx (AYX) moved higher Wednesday in tandem with other growth stocks as investors kicked off the third quarter on an upbeat note. Though there was no company-specific news out on the cloud-based data analytics specialist, shares seemed to gain on investor enthusiasm, which followed a bullish analyst note earlier in the week and positive news on macroeconomic conditions and on the vaccine front today.
As a result, the stock closed up 6.7% on Wednesday.
Image source: Getty Images.
So what
Despite a continuing surge in coronavirus cases, investors blew off those concerns and focused on a report from Pfizer that delivered early positive data from an ongoing phase 1/2 trial for a coronavirus vaccine.
The Institute for Supply Management manufacturing index also showed an expansion in June, and its highest reading since last April at 52.6, versus estimates at 49.8. That showed that factory activity had come roaring back to life after the shutdowns in the spring.
What was particularly noteworthy about the market's response is that tech stocks widely outperformed beaten-down cyclical stocks as the Nasdaq rose 1% while the Dow Jones Industrial Average fell 0.3%. That shows that investors seem to think the rising virus cases will weigh on stocks that are sensitive to the pandemic, like the consumer discretionary sector, while they expect tech stocks and enterprise-focused cloud stocks to continue to do well as that part of the economy has been largely unaffected by the pandemic.
On Monday, Goldman Sachs analyst Christopher Merwin raised his price target on Alteryx from $164 to $216 and maintained a buy rating on the stock. Merwin said that the low-interest-rate environment favors a higher price for the stock, and that mission-critical software companies like Alteryx have demonstrated their value during the pandemic.
Now what
Alteryx is increasingly focused on selling its products to large companies, and it still has a lot of room for growth as more business shifts to the cloud and companies realize how Alteryx's data analytics software can help them save money and boost productivity.
Management's guidance was lower than expected for the second quarter, but Alteryx may just be taking a conservative approach given the uncertainty around the pandemic. The long-term growth path still looks promising here, and investors seem to be recognizing that as they send the stock to an all-time high today.
