On Monday, Duck Creek Technologies Inc. (NASDAQ:DCT) shares edged lower by about 1% ahead of its fiscal first-quarter results. Analysts are relatively pessimistic about its earnings.
They expect its bottom line to decline by about 50% from the same quarter a year ago to -$0.01, while revenue is forecasted to increase by 16.8% to $68.83 million.
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The stock has plummeted by more than 34% since the 13th of October, swinging to a net 12-month decline of about 28%.
Should you bet on DCT’s growth?
From an investment perspective, Duck Creek shares trade at a steep forward P/E ratio of 261.68, making the stock too expensive for value investors.
However, its long-term growth prospects look exciting with analysts expecting its EPS to grow at an average annual rate of about 56% over the next five years.
Therefore, the stock could be an interesting option for growth investors willing to overlook the short-term turbulence.
Technically, Duck Creek shares seem to be trading within a gently ascending channel formation in the intraday chart. In addition, the stock recently bounced off the trendline support to recover from the oversold conditions of the 14-day RSI.
However, with shares yet to reach the overbought conditions, investors could target extended gains at about $32.53, or higher at $35.26. On the other hand, $27.27, is a crucial support level.
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