Tableau Software - Be Careful What You Hear On The Street
After posting better than expected earnings on Wednesday, Q4 EPS of $0.20 vs. $0.00, Tableau Software (NASDAQ: DATA) shares have skyrocketed from $79.43 to as high as $95.63.
The upside surprise has prompted two Wall Street firms to substantially raised expectations for the issue. FBN Securities maintained its Outperform rating and raised the price target from $85.00 to $110.00. Also, Morgan Stanley sees more upside for DATA and reiterated its Equal-Weight rating, citing licensing growth of 93 percent year over year that parlayed into 25 percent beat and accelerating growth in the fourth quarter.
Other Wall Street firms, such as Goldman Sachs, Deutsche Bank, Cantor Fitzgerald, Baird and RBC Capital correctly identified the potential upside in DATA and initiated coverage over the past two months. These firms have yet to comment on the issue. It will interesting to hear the comments as all of the prior targets have been exceeded. Will they ring the register or get greedy and predict more upside in the issue?
Shareholders of the issue may be better off if the Street takes profits and moves on as opposed to jumping on the bandwagon. It seems that when much of the Street leans the same way, price tends to go in the opposite direction.
One example of this is the bullish calls coming from the Street at the end of 2013, for continued upward momentum in the market and another blockbuster year for the indexes. After an extended pause at the highs, the market has tanked and shows no sign of turning around anytime soon.
A better example in Wednesday's trading are the 3D printing stocks that are being annihilated. A profit warning from 3D Systems (NYSE: DDD) guided much lower for FY 2014 from an estimated $1.27 down to $0.73-$0.85. As a result, DDD is off 14 percent at $61.70, on the rebound from the $54.63 low from earlier in the session.
Although this should not come as a total surprise to the Street, markets were stunned. On January 14, 3D printing company ExONE (NASDAQ: XONE) substantially reduced FY 2014 revenue from $48 million to the range of $40-$42 million. The news knocked nearly six points off the issue from $62.25 to $56.85. A steal if traders had exited then as opposed to its current price of $42.00.
Back in mid-December, The Wall Street Journal reported that the 3D printing sector had come of age and now Wall Street has become focused on it. The incredible growth in the share prices of the manufacturers of 3D printing equipment finally attracted the attention of Wall Street's biggest banks.
Analysts at Deutsche Bank, Jefferies, JP Morgan Chase, Piper Jaffray and Citigroup initiated coverage on the sector and predicted that 3D printing might be the future of manufacturing.
At that time, XONE was trading at 54.00, DDD at 81.00 and SSYS at 120.00. Although the issues rallied after the initiations with no cues from the Street to exit, the rallies fizzled. XONE now changes hands at $41.00, DDD at $61.50 and SSYS at 112.00.
For now, shareholders of DATA are sitting on some huge profits. However, some have chosen to take some profits as it has declined over four points to $91.00 after reaching $95.63 earlier in the session.
With such an impressive beat this quarter, expectations will now be raised for the company and it may be difficult to replicate the same results in the first quarter of 2014. But shareholders should not be as worried about the next quarter's results as much as they should worry about the Street getting overzealous with predictions for the issue.
The share price of DATA just may follow the same course of the market in 2014 as well as the stocks in the 3D printing sector.
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