HashiCorp (HCP) Stock Trades Up, Here Is Why
What Happened:
Shares of cloud infrastructure automation platform HashiCorp jumped 12.8% in the morning session after the company reported fourth-quarter results, which beat Wall Street's revenue and EPS estimates, driven by an increase in its customer base.
On the other hand, its net revenue retention rate of 115% fell short of analysts' 119% forecast. Its full-year revenue guidance also came in slightly below expectations (missed by 1.6%), suggesting a slowdown in demand. However, profitability ratios were strong during the quarter as Hashiicorp maintained its 80%+ gross margin while free cash flow stayed positive for the second consecutive quarter.
With the results, HashiCorp announced a share repurchase program for up to $250 million of the company's common stock. Overall, this was a decent quarter for HashiCorp.
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What is the market telling us:
HashiCorp's shares are very volatile and over the last year have had 22 moves greater than 5%. But moves this big are very rare even for HashiCorp and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move we wrote about was 9 days ago, when the company gained 12.7% on the news that Morgan Stanley upgraded the stock's rating from Equal Weight (Hold) to Overweight (Buy) and raised the price target from $23 to $30. The new price target implied a potential 20% upside from where shares traded when the upgrade was announced.
The analyst added, "We believe a resurgence in cloud initiatives is translating to better demand for HashiCorp after a difficult FY24, and expect stronger bookings performance in FY25 will allow the company to reassert 20%+ revenue growth in FY25 and beyond."
HashiCorp is up 17% since the beginning of the year, but at $26.77 per share it is still trading 24.6% below its 52-week high of $35.49 from June 2023. Investors who bought $1,000 worth of HashiCorp's shares at the IPO in December 2021 would now be looking at an investment worth $313.89.
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