Is Further Upside Left in the Stock?


This story originally appeared on Zacks

Vocera Communications (VCRA) shares ended the last trading session 26.6% higher at $79.17. 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 4.5% gain over the past four weeks.

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VCRA stock rallied after it announced that the company will be acquired by a medical device maker — Stryker. The entities have inked a definitive merger agreement, wherein Stryker will pay $79.25 per share in cash, representing total equity value of nearly $2.97 billion.

Vocera’s avant-garde clinical workflow and hardware solutions are a strategic fit for Stryker’s Advanced Digital Healthcare offerings. As a result, the combined synergies will bolster the medical technology company’s focus beyond core MedTech while enhancing the lives of caregivers and patients. The deal has been approved by both parties and is expected to close in the first quarter of 2022.

This hospital mobile communications company is expected to post quarterly earnings of $0.17 per share in its upcoming report, which represents a year-over-year change of -39.3%. Revenues are expected to be $63.55 million, up 12.3% 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 Vocera, 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 VCRA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>

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