Why Medidata Solutions Shares Surged

Why Medidata Solutions Shares Surged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of cloud-based clinical development technologist Medidata Solutions surged 19% today after its quarterly results and outlook topped Wall Street expectations.

So what: The stock has soared over the past year on a string of better-than-expected quarters, and today's results -- second-quarter EPS of $0.36 on revenue of $68.1 million versus the consensus of $0.29 ad $66.7 million -- only reinforce that momentum. In fact, year-over-year operating margins expanded 230 basis points to 13%, suggesting that Medidata's competitive position is strengthening, too.

Now what: Management now sees full-year revenue of $273 million-$276 million, up from a prior view of $270 million-$274 million and bracketing the consensus estimate of $274.3 million. "Our revised revenue and profitability guidance continues to validate our prudent investments in sustainable growth," said CFO Cory Douglas. "Record operating cash flow this quarter also demonstrates the long-term cash generation potential of Medidata's highly scalable and vertically focused cloud business." With the stock now up nearly a whopping 200% over its 52-week lows and trading at a lofty forward P/E of 60, much of that potential might already be baked into the valuation.

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The article Why Medidata Solutions Shares Surged originally appeared on Fool.com.

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