Will CommVault Continue Its Steady Climb Higher?

| About: CommVault Systems, (CVLT)

Computer virtual storage systems are becoming one of the fastest growing segments of the software industry. "Cloud" storage saves companies money and frees up valuable hardware storage space. One of these companies is CommVault Systems (NASDAQ:CVLT). Its Simpana 9 streamlines data and manages both the bridge to the virtual data, the virtual data storage, security and back-up for large companies seamlessly.

Investor's Business Daily has listed the company at #3 on its list of 10 New American Companies for October 2011. This is based on CommVault's consistent increase in revenue over the last several quarters. And CommVault has no debt. Gartner's 2011 Analysis said:

CommVault has been positioned in the “Leaders” Quadrant in Gartner's Magic Quadrant for Enterprise Disk-Based Backup/Recovery. Gartner is a recognized, independent industry analyst and consulting firm.

The price to earnings for CommVault is high at almost 80, but this is typical for a growing tech stock. Analyst Robert Cotter said Saturday in Earnings Lookback:

When CommVault Systems reported earnings 11 days ago on November 1st, 2011, analysts, on average, expected the company to report earnings of $0.21 on sales of $93.1 million. CommVault Systems actually reported earnings of $0.24 per share on sales of $97.5 million, beating EPS estimates by $0.03 and beating revenue estimates by $4.3 million. Shares of CommVault Systems have climbed from $44.78 to $47.78, representing a gain of 6.7% since the company reported earnings 11 days ago.

The stock closed Friday at $47.78, which is a little bit above the mid-range of most analysts, with a high of $55. But looking at the charts, it will probably bust through that top price soon. Since its IPO in 2006, the stock has been on a steady incline. And when compared with the S&P over the last 3 years, it is up over 300%.

CVLT vs S&P 500

This incline has continued, except for the August to October dip this year that most companies suffered (especially tech stocks).

To reinforce its strength, the stock has been trading above its moving averages for the past year, a definite bullish sign. However Robert Cotter notes:

Based on a current price of $47.78, CommVault Systems is currently 6.0% above its average consensus analyst price target of $44.90. The stock should discover initial support at its 50-day moving average (MA) of $39.57 and subsequent support at its 200-day MA of $38.66.

I don't see this stock falling that much. It would take a lot for it to drop almost $10 a share.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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