Should you buy or sell Duck Creek Technologies as shares slide on soft sales outlook?

on Oct 15, 2021
  • Duck Creek Technologies shares on Friday plunged nearly 23% after announcing its fiscal Q4 results.
  • DCT reported its most recent quarterly results Thursday after markets closed.
  • The company issued weak revenue guidance for 2022, despite topping FQ4 2021 estimates.

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On Friday, Duck Creek Technologies Inc. (NASDAQ:DCT) shares crashed nearly 23% after announcing its most recent quarterly results. The company reported its fiscal Q4 and full-year 2021 revenue and earnings Thursday after markets closed.

The company posted FQ4 non-GAAP earnings per share of $0.02 in line with analyst expectations. On the other hand, its GAAP EPS of -$0.04 was slightly above the average for analyst expectations of -$0.05, while revenue for the quarter grew by 21.4% to $70.8 million, $1.71 million ahead of estimates.

The company issued a full-year 2022 revenue guidance of $292-$300 million, slightly below the consensus Street forecast of $303.5 million.

Is it time to buy DCT?

From an investment perspective, Duck Creek shares trade at a steep forward P/E ratio of 583.56, making the stock too expensive for value investors to consider adding it to their portfolios. 

In addition, Street analysts expect its earnings per share to plummet by more than 66% this year, before declining further by nearly 22% next year. Therefore, even growth investors may opt for alternatives in the market.

As a result, it may not be the time to consider buying the stock given its disappointing outlook.

Source – TradingView

Is there time left to sell?

Technically, Duck Creek Technologies shares appear to have recently plunged sharply, triggering a downward breakout from a sideways channel formation. As a result, the stock is now trading in oversold conditions, thus creating an opportunity for a rebound.

Therefore, although DCT’s outlook looks disappointing after issuing a weak revenue outlook, it may be best to wait for a short-term rebound before selling the stock.

Therefore, investors could target short-term rebounds at about $39.49, or higher at $43.17, while $32.79 is a crucial support zone.

Time to hold DCT

In summary, given Duck Creek’s post-earnings plunge, the stock now trades at new all-time lows, creating an opportunity for a short-term rebound. 

Therefore, it may be best to wait for the stock price to recover rather than selling at the current levels.


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