ZDGE - Is it too risky to buy Zedge stock as shares plunge to erase post-earnings gains?
On Thursday, Zedge Inc. ( NYSEAMERICAN:ZDGE ) shares declined by more than 5%, erasing Wednesday’s gains. The stock had spiked 4.4% to recover from Tuesday’s post-earnings swing to losses. Zedge announced its most recent quarterly results Monday after markets closed, beating the consensus analyst expectations on revenue and earnings.
The company posted FQ1 GAAP earnings per share of $0.14, outperforming the average analyst estimate of $0.10. On the other hand, its quarterly revenue increased by more than 60% from the same quarter a year ago to $6.03 million, surpassing the consensus expectation by $0.77 million.
Should you bet on Zedge’s growth?
From an investment perspective, Zedge shares trade at compelling trailing 12-month P/E and forward P/E ratios of 14.51 and 13.87, respectively. Therefore, the stock could be an exciting option for bargain hunters.
On the other hand, analysts expect its earnings to rocket 1000% this year before growing by a further 20% next year. Therefore, Zedge could also gain the interest of growth investors.
Technically, Zedge shares seem to have recently spiked to complete an upward breakout from a descending channel formation. As a result, the stock appears to have fully recovered from oversold conditions creating an exciting opportunity to buy the rebound.
Therefore, investors could target extended gains at about $10.35, or higher at $11.58. On the other hand, if the stock pulls back before reaching overbought conditions, it could find support at $8.08, or lower at $6.95.
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