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Why Zuora Stock Popped Today

By Chris Neiger - Apr 8, 2021 at 4:06PM

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An analyst started coverage of the stock with a buy rating.

What happened

Shares of Zuora Inc. (ZUO -4.82%) rose today after Berenberg analyst Andrew DeGasperi initiated coverage of the tech stock with a buy rating and a $20 price target. 

Zuora's stock was up by 10% as of 3:09 p.m. EDT. 

So what 

Investors were happy to see that DeGasperi is bullish on Zuora's stock, which has gained 95% over the past 12 months. The positive investor note comes after Zuora beat Wall Street's fourth-quarter estimates just last month. 

Multi-colored arrows pointing up.

Image source: Getty Images.

On March 11, Zuora reported a Q4 non-generally accepted accounting principles (GAAP) loss of $0.02 per share, which was better than analysts' consensus estimate of $0.05 loss per share. 

But the company's stock has experienced some volatility since the beginning of 2021 as some tech investors have looked to other sectors of the market for growth.

Tech stocks performed well during 2020 as investors poured money into companies they thought would do well during the pandemic. But as more vaccines are being rolled out in the U.S. and social distancing restrictions have eased, investors have jumped to other investment opportunities, like airlines and banks.

DeGasperi's buy rating for Zuora today reminded some investors that there's still plenty of potential in the tech sector.

Now what 

Investors can expect some modest growth from the company in the current first quarter of fiscal 2022. Zuora's management said last month that Q1 sales will be $79 million at the midpoint of guidance, which would represent a 7% year-over-year increase. 

Additionally, management said that Zuora's non-GAAP loss would be about $0.03 per share, an improvement from a loss of $0.06 per share in the year-ago quarter.

Zuora investors should also continue to keep a close eye on the broader technology sector, which is likely to continue experiencing share-price swings as investors navigate a U.S. economy that's trying to emerge from the pandemic.

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