Software stock rises after bullish report

ByLance T. Lee

Aug 21, 2022

Bill.com Holdings Inc. (NYSE: BILL) the stock is up today, up 13.8% to trade at $170.08 at last glance, following the software company’s fourth-quarter losses of 3 cents a share , better-than-expected revenues and optimistic forecasts. As many as nine analysts raised their price targets after the event, with the highest rising from KBW to $269 from $245.

Today’s pop has BILL on track to snap a three-day losing streak, now trading at its highest levels since early May. The stock has risen — albeit jerkily — since its nearly two-year low of $89.87 on May 12, though it is still 29.6% lower year-to-date.

Options bulls are targeting the post-results enthusiast, with 11,000 calls traded so far – 15 times the average intraday volume and more than double the number of puts. Expiring today, the August 180 call is the most popular, with new positions being bought to open there. These traders are lucky, because security Schaeffer Volatility Dashboard (SVS) sits at 93 out of 100, meaning it has exceeded options traders’ volatility expectations over the past year.

Analysts are also extremely bullish on Bill.com shares. Of the 15 place settings, 14 bear a “strong buy” rating. Meanwhile, short interest represents 6.3% of the stock’s free float, or three days of pent-up purchasing power.

When inflation rises, it is not difficult to notice higher prices. But you don’t have to be very old to understand the expression that a dollar doesn’t buy as much as it used to. The Happy Meal was introduced in 1979 for a price of $1.10. Today, that same meal costs $2.99. Still, it remains one of the restaurant chain’s most popular items. It is also a barometer of the economy due to its convenience for parents.

And consider the iPhone that costs 81% more in 2022 than the original model launched in 2007. Yet despite the price increase, consumers are willing to pay what is needed.

The key to both of these examples, and others like them, is pricing power. A company that has the ability to raise its prices can maintain its profit margins. This means that it provides consistent results, regardless of what is happening in the economy in general. In good times, this can be taken for granted. But when the economy slows down, this consistency stands out.

In this special presentation, we look at seven companies with significant pricing power at all times, especially with inflation currently at 40-year highs.

See “7 stocks with the pricing power to push through high inflation”.


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