Quotient Technology may gain 60%. But is it a strong buy?

Quotient Technology may gain 60%. But is it a strong buy?

The stock markets rallied during the last few months. The S&P 500 and the NASDAQ indexes hit record high levels, having fully rebounded from the collapse in March. It would seem the perfect time to buy, but some Wall Street experts approach the rally with caution. The coronavirus pandemic has not faded. Furthermore, narrowing polls show that the upcoming November elections are up for grabs.

 

Still, there are some sectors that are more secure than others. The Tech sector is one of them. Quotient Technology is a digital tech company, which offers marketing solutions for e-commerce. Quotient creates digital coupons personalized by the use of deep data dives – website visitations, purchasing behaviors, and online shopping histories. The company’s coupons and ads are closely targeted to consumers.

 

Due to the coronavirus crisis, Quotient struggled in the first half of 2020. End-use consumers, finding themselves out of work and forced to stay home, alerted their purchasing habits. The company usually sees a net loss each quarter, like many tech operators. However, it saw that loss deepen in the first quarter and again in the second quarter. But despite its shrinking financials, Quotient has managed to garner the analysts’ attention. Chad Bennett from Craig-Hallum thinks that COVID-19 will help to clear a way forward for the company.

 

What does the analyst say?

 

According to Bennett, the pandemic is aggressively accelerating the adoption of grocery/CPG innovations. That will result in demand for Quotient’s solutions. The analyst thinks that the signing of Rite Aid and Hyvee as Retailer iQ and Performance Media partners is enough evidence of this claim. The pandemic may spur a secular shift, which Quotient will greatly benefit from – added Bennett.

 

The analysts gave Bennett a Buy rating. His $14 price target indicates a 60% upside potential for next year. The analyst consensus rating on the stock is a Moderate Buy, though. Shares are trading for $8.76 presently, with the average price target of $10.65, which suggests 21.5% upside potential.

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