American Well (AMWL) Surges 13.3%: Is This an Indication of Further Gains?

American Well Corporation AMWL shares rallied 13.3% in the last trading session to close at $6.24. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 1.6% loss over the past four weeks.

American Well scored a strong price increase on investors’ optimism surrounding the company’s robust fourth quarter financial performance. It reported sales of $55.3 million, which surpassed the Zacks Consensus Estimate by 5.3%. At the same time, the growing investor enthusiasm for AI-driven digital healthcare platforms is adding speculative interest in telehealth companies like American Well. 

This company is expected to post quarterly loss of $0.77 per share in its upcoming report, which represents a year-over-year change of +55.5%. Revenues are expected to be $50.25 million, down 24.8% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For American Well, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on AMWL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

American Well is a member of the Zacks Medical Info Systems industry. One other stock in the same industry, Health Catalyst HCAT, finished the last trading session 9.8% higher at $1.23. HCAT has returned -4.3% over the past month.

For Health Catalyst, the consensus EPS estimate for the upcoming report has changed -400% over the past month to $0.01. This represents no change from what the company reported a year ago. Health Catalyst currently has a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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