Tech Data (TECD) Hits 52-Week High On Strong Fundamentals

Tech Data Corp. (NASDAQ:TECD) , a distributor of technology products and solutions, touched a new 52-week high of $82.58 in yesterday’s trading session, eventually closing a bit lower at $82.18.

The company has recently made a few product developments, which lifted investors’ sentiments. Last week, Tech Data launched its novel platform for online publication named Advanced Technologies Playbook for its value-added resellers (VARs) in the U.S. and Canada. The publication, done on a quarterly basis, will equip the VARs with the latest industry trends and other critical information. Prior to that, the company added a number of independent software vendors (ISVs) for supporting the Microsoft (NASDAQ:MSFT) solutions ecosystem though Tech Data Cloud.

Tech Data has been gaining momentum since May 26 when it reported its first-quarter fiscal 2017 results. The company had delivered strong bottom-line growth despite lower-than-expected sales. Also, an upbeat guidance for the second quarter added to investors’ optimism.

Tech Data has been 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.

In the first quarter, the company’s business continued to see strength in broadline, software, security, and consumer electronics divisions though performance of mobility and data center operations remained soft. Sales were also impacted to an extent by the ongoing cost–control and margin expansion measures.

In the last one month, Tech Data shares have surged over 23% compared with a gain of 1.72% in the S&P 500 index.

Moreover, following its earnings release, the company has seen positive estimate revisions. Four estimates for fiscal 2017 and fiscal 2018 each were revised higher over the past 30 days. This pushed up the Zacks Consensus Estimate for 2017 by 3.5% to $6.28 per share while that for 2018 increased nearly 3% to $6.53 per share.

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 Castlight Health, Inc. (NYSE:CSLT) , also holding a Zacks Rank #2.