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Strength Seen in Smith Micro Software, Inc. (SMSI): Can Its 7.7% Jump Turn into More Strength?

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Smith Micro Software, Inc. (SMSI) shares soared 7.7% in the last trading session to close at $5.15. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.6% loss over the past four weeks.

The increase in share price can be attributed to continued momentum in the company’s carrier-grade solutions. The company’s diversified customer base and extensive product portfolio, which includes the likes of CommSuite, SafePath and ViewSpot platforms, bodes well for the company’s growth prospects.

The acquisition of Avast’s Family Safety Mobile Business has added mobile family safety services like content filtering, location features and screen time management to Smith Micro Software’s product portfolio. This is likely to further boost the company’s presence in the family safety software-as-a-service (SaaS) space.

In the last reported quarter, the company’s revenues from Family Safety business (including SafePath and Avast Family Safety Mobile Business) soared 51% year over year to $11.1 million. For the current quarter, the company expects Family Safety revenue to increase between 9% and 14% on a quarter over quarter basis.

This company is expected to post quarterly earnings of $0.01 per share in its upcoming report, which represents a year-over-year change of -75%. Revenues are expected to be $17.09 million, up 35.3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Smith Micro Software, Inc., 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 SMSI 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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