Tech Data (TECD) Continues To Gain: Should You Buy Now?

Tech Data Corp. (NASDAQ:TECD) has been gaining momentum since it reported first-quarter fiscal 2017 results on May 26. The company’s shares have gained nearly 9% since then.

In the first quarter, the company had delivered strong bottom line growth despite lower-than-expected sales. This was due to the ongoing cost–control and margin expansion measures. The company’s business continued to see strength in broadline, software, security, and consumer electronics divisions though the performance in the mobility and data center operations remained soft.

But the company provided an upbeat guidance for the second quarter. It is reportedly benefiting from market share gains from peers like Ingram Micro Inc. (NYSE:IM) . Also, some of its clients like Dell are transitioning their product from direct sales to channel distribution, which is opening newer avenues for the company.

As a result, in the past one month, Tech Data’s shares have gained nearly 16.4%. This is significantly more than the growth rate of the S&P 500 index, which is about 0.75% in the same period.

Furthermore, the company has also been undertaking strategic initiatives to review and strengthen its operations including collaboration with new vendors and expansion of its coverage model. Additionally, Tech Data has been focusing on the development of its capabilities in integrated supply chain, value-added services, data center, cloud and consumer electronics.

Over the last 7 days, the Zacks Consensus Estimate for 2016 has increased from $6.07 to $6.22 per share, while that for 2017 increased from $6.34 to $6.50.

Nonetheless, customer-concentration risks and exit from businesses in less profitable regions can pose some challenges in the near term.

At present, Tech Data carries a Zacks Rank #2 (Buy). Investors interested in the space may also consider Atlassian Corporation Plc (NASDAQ:TEAM) and Castlight Health, Inc. (NYSE:CSLT) , each carrying a Zacks Rank #2.