Sumo Logic stock prediction as shares spike more than 9% on solid Q3 results

By: Motiur Rahman
Motiur Rahman
Md Motiur is a Financial Analyst at Invezz covering the North American, European and Asian stock markets. He has… read more.
on Dec 7, 2021
  • Sumo shares on Tuesday spiked more than 9% after announcing its FQ3 results.
  • The company reported its most recent quarterly results Monday after markets closed, beating expectations.
  • The stock still trades at a reasonable P/S ratio of 7.90.

On Tuesday, Sumo Logic Inc. (NASDAQ:SUMO) shares surged more than 9% after reporting its most recent quarterly results. The company announced its fiscal third-quarter revenue and earnings Monday after markets closed, beating the consensus for analyst expectations. 

Sumo posted FQ3 non-GAAP earnings per share of -$0.12, outperforming the average for analyst estimates of -$0.14. On the other hand, its GAAP EPS of -$0.28 missed the expectation of -$0.25, while revenue for the quarter increased by 19.6% from the same quarter last year to $62.02 million, exceeding Street expectations by $1.17 million.

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Is Sumo a growth stock?

From an investment perspective, Sumo shares trade at a reasonable price-sales ratio of 7.90, making the stock an interesting option for value investors. 

However, analysts expect its bottom line to worsen by more than 76% this year before recovering slightly by 10.70% next year.

Therefore, the stock may also not be an ideal option for growth investors.

Source – TradingView

Technically, Sumo shares seem to have recently spiked to complete an upward breakout from a descending channel formation. As a result, the stock has fully recovered from the oversold conditions of the 14-day RSI.

Therefore, with shares yet to reach overbought conditions, investors could target additional technical gains at about $17.28, or higher at $19.05, while $12.99 and $10.99, are crucial support zones.

In summary, although Sumo shares could fall in the long-term amid a declining bottom line, the stock could extend the short-term gains after a solid Q3.

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