nLight (LASR) Moves 27.3% Higher: Will This Strength Last?

nLight LASR shares soared 27.3% in the last trading session to close at $74.71. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 6.4% loss over the past four weeks.

The optimism surrounding the stock can be attributed to nLIGHT securing a Joint Laser Weapon System contract with a total potential value of up to $627 million from the U.S. Department of War. The company received an initial award of $44 million and will develop high-energy laser weapon systems for next-generation cruise missile defense, strengthening its position in the growing directed energy market.

This laser maker is expected to post quarterly earnings of $0.14 per share in its upcoming report, which represents a year-over-year change of +133.3%. Revenues are expected to be $78.52 million, up 27.2% 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 nLight, 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 LASR 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 >>>>

nLight is a member of the Zacks Electronics - Semiconductors industry. One other stock in the same industry, Qualcomm QCOM, finished the last trading session 2.4% higher at $191.11. QCOM has returned -2.4% over the past month.

For Qualcomm, the consensus EPS estimate for the upcoming report has changed -0.6% over the past month to $2.21. This represents a change of -20.2% from what the company reported a year ago. Qualcomm 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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