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Zendesk (ZEN) Stock Jumps 5.6%: Will It Continue to Soar?

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  • ZEN

Zendesk (ZEN) shares ended the last trading session 5.6% higher at $122.01. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 4.3% loss over the past four weeks.

The increase in share price can be attributed to the continued demand for the company’s solutions including Zendesk Suite as well as Zendesk Sunshine platform among others. Business enterprises across all sectors are revamping their digital customer engagement experiences triggered by the coronavirus crisis. Zendesk provides cloud-focused customer relationship management (CRM) software.

In the last reported quarter, the company’s revenues surged 29% year over year driven by increasing demand from enterprise customers. Adoption of Zendesk Suite more than doubled on a quarter over quarter basis in the second quarter of 2021.

For third quarter of 2021, the company expects revenues to be between $332 and $337 million compared with revenues of $261.9 million reported in the prior-year quarter.

Price and Consensus

Price Consensus Chart for ZEN
Price Consensus Chart for ZEN

This customer-service software maker is expected to post quarterly earnings of $0.16 per share in its upcoming report, which represents a year-over-year change of -5.9%. Revenues are expected to be $334.92 million, up 27.9% 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 Zendesk, 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 ZEN 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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