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Here's Why Radware (RDWR) Stock Soared Today

Joseph Lu
Updated

Shares of Radware Ltd. RDWR closed Tuesday trading with a 7.46% gain to $16.57 per share after posting a loss of $4.1 million in its first quarter.

The Israel-based company is a leading provider of cyber security and application delivery solutions. The company reported $48.9 million in revenues for the first-quarter of 2017, up 1% from a year ago. While sales in the Americas region dropped 8.5% from last year, the gap was made up by the 16.1% and 1.1% revenue growth from the EMEA and APAC regions, respectively.

Following the earnings report, Radware received a "Buy" upgrade from Dougherty & Company. The firm's analyst justified the rating upgrade on the earnings beat and more importantly, the new one-year plan to buy back $40 million worth of shares.

Radware’s revenue figures beat the Zacks Consensus Estimate of $47.9 million.

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“We are pleased with the trends underlying the results for the first quarter and with the positive momentum that continued into the second quarter,” said Roy Zisapel, Radware President & CEO. “Positioning us well to meet our plans for 2017."

The company is looking to repurchase up to $40 million of its issued and outstanding ordinary shares by the end of 2017. On the one hand, the company could believe its stock is undervalued, and it will grow much stronger in the future. By purchasing now at a lower price, then releasing them again at a higher market price, the company will be able to make a return.

On the other hand, buying back the company's shares is an easy way to make the business look more attractive to investors. By reducing the number of shares, the company's earnings per share automatically go up, which attracts short-term investors.

The revenue beat and sales growth in the EMEA and APAC regions certainly explained the company’s and Dougherty's confidence in the future. However, whether you are a short-term or long-term investor, you should be cautious and pay attention to any sudden movement to the market.

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