RightNow Technologies Inc
Price - $15.50 52 Week - $8.60 - $19.99
2009 EPS - $0.16 Trailing EPS – $0.12
P/E – 97.48 Market Cap - 495.80 Mil
For those of you who own shares of RightNow Technologies Inc RNOW, tomorrow will hopefully signal the sign of good things to come, for tomorrow is analyst day. Several had released reports just after the market closed on Wednesday (5/19) and have been positive. From the few I read, buy ratings were maintained and one price target was set at $20, interesting given that they have not seen the sunny side of $20 since 2007, but growth prospects do seem promising.
Back in the day, when the world was peaceful, stabilizing, and not being attacked with cleavers or spewing oil, there was a very hot topic in the equities market known as cloud computing. Just saying it reminds one of simpler times; anyway, there was a multitude of companies that were thought to comprise this “sector for the next decade” with behemoths like IMB, Google, and Oracle taking a somewhat backseat to uber bulls Salesforce.com and VMWare. Around mid January I began to watch five of these very closely and had been until the world fell apart. But in this short period of time we’ve seen remarkable gains, some of which have obviously been pared in the last week as the techs took a major hit. These stocks were the aforementioned Salesforce.com CRM (which I did eventually obtain a long position in) and VMWare VMW, and Netsuite N, Terremark TMRK, and RightNow Technologies RNOW. Below you’ll see the price on Jan 25th, the close on May 19th, the percent change, and the high since then.
1/25 5/19 % Change High
CRM - $64.13 $81.60 27.2% $88.40
VMW - $42.00 $58.82 40.4% $62.84
N - $15.89 $14.67 -7.6% $16.25
TMRK - $8.25 $7.65 -7.2% $8.57
RNOW - $16.95 $15.50 -8.6% $19.99
Clearly the best of breads have been just that, but is it time for one of these smaller stocks to take off? The three were heavily affected by poor earnings reports over the last 2 quarters leading to massive losses, Netsuite and Terremark slightly more so than RightNow. With that being said, CRM reports on the morning of Thursday May 20th and could set the stage for the industry for the next few months.
So what does analyst day mean to RNOW and how sustainable are their growth prospects. RightNow reported on April 28th and the majority of new price targets were set the following day, 6 of which are at $20 or above. Again, the earnings did not meet expectations and as of right now trailing EPS ($0.12) is below that of the 2009 EPS (0.16). The following graph illustrates loses that have been suffered since.
Regardless, RightNow has performed rather strongly over the past 3 weeks never falling below the $15 mark and the above trend line may indicate some support. With several analysts reiterating their buy positions or perhaps even upgrading to a buy rating this stock is step to pop even amongst the world’s volatility.
This graph shows the latest drop in the 15 moving average which began the day before the P&G debacle. The 15 day has crossed beneath the 65 day and if recent history is to repeat itself, it will not be long before another upwards swing occurs.
Fundamentally, RightNow is not the most appealing in its sector, but tech stocks come with inherent risk. They claim to difference themselves from the rest by offering CX: Customer Experience rather than CRM: Customer Relationship Management. They focus on making the website experience better while increasing customer loyalty among other things. Their clients include John Deere, Cisco Systems, and the US Social Security Administration, which of course bodes well for there chances of making it through the next year alive. Analysts agree, with 8 buys, 9 holds, and only 1 sell; though this is mainly a reflection of the industry as a whole. With that being said, there is currently an average target price in the $19.25 range with EPS growth through 2011 estimated to maintain steady growth inline with the industry. Additionally, revenue has risen steadily for the past several years and is likewise expect to continue. With this in mind we can expect to see a drop in the P/E multiple which is currently around 97. Given this data and all that preceded it I personally think that RNOW is a smart wager for the coming quarter to a year as long as the coming earnings come closer to estimates.
Any comments/criticisms would be greatly appreciated.
Disclosure: No Positions