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Despegar.com (DESP) Moves 15.3% Higher: Will This Strength Last?

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Despegar.com (DESP) shares rallied 15.3% in the last trading session to close at $14.74. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 6% gain over the past four weeks.

The upside was owing to the better-than-expected fourth-quarter 2020 results announced by the travel company. The company’s fourth-quarter 2020 loss (excluding 17 cents from non-recurring items) of 24 cents compared favorably to the Zacks Consensus Estimate of a loss of 35 cents. Moreover, the company’s revenues of $53.2 million surpassed the Zacks Consensus Estimate of $34.9 million.

Price and Consensus

Price Consensus Chart for Despegar.com
Price Consensus Chart for Despegar.com

This online travel company is expected to post quarterly loss of $0.35 per share in its upcoming report, which represents a year-over-year change of -3600%. Revenues are expected to be $34.9 million, down 76% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Despegar.com, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on DESP going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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