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New Relic Stock Rallies on Sale News
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New Relic Stock Rallies on Sale News

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Shares of New Relic rallied after the news that the company was considering a potential sale option caught investors’ attention.

Software company New Relic (NYSE: NEWR) surprised its investors by rising 17.5% on Wednesday to close at $61.55. The stock rose following the news that the company was considering a potential sale option amid takeover interest from private equity firms, according to a Reuters report. NEWR stock was up 2.47% at the time of writing on Thursday.

As part of the cooperation agreement, Kevin Galligan, a Partner at Jana Partners, was appointed to New Relic’s board in June. Jana Partners, which currently holds 3.53 million shares of NEWR, had then increased its stake in the company to 5.3%, according to a 13D filing.

As per a report by Reuters, Jana Partners has a reputation of pushing companies for sale in which it is a stakeholder.

Recent Developments at New Relic

Last month, the company announced the availability of New Relic Partner Stack, which is an enhanced program that provides New Relic’s vast global partner ecosystem with comprehensive training and accreditation programs, co-marketing, go-to-market, and sales resources.

In May, New Relic entered into a strategic collaboration agreement with Microsoft to support firms increase cloud migration and multi-cloud initiatives. According to the company, the partnership will enable Microsoft Azure customers to use New Relic as their default observability platform natively inside Azure Portal.

New Relic also impressed its stakeholders with strong revenue growth in Fiscal 2022. It reported revenues of $786 million and surpassed its guidance of $710 million.

The revenue outlook for Fiscal 2023 is also impressive as the company is expecting a 17-18% year-over-year rise in the range of $920-$930 million.

Street Is Optimistic about New Relic

Overall, the Street is optimistic about the stock and has a Moderate Buy consensus rating based on five Buys and five Holds. New Relic’s average price target of $66.25 signals that the stock may surge nearly 7.6% from current levels. Shares of New Relic have declined 41.9% so far this year.

TipRanks data shows that financial bloggers are 100% Bullish on NEWR, compared to the sector average of 65%. Meanwhile, hedge funds are Very Negative about the stock, as they have decreased their holdings in NEWR stock by 173,300 shares in the last three months.

What Should NEWR’s Investors Do?

New Relic is still considering and exploring the potential sale option with financial advisers. As of now, a wait-and-watch strategy is expected to be fruitful for investors, even though rising revenues, product innovation, impressive outlook, and strategic tie-ups paint a rosy picture for the stock.

Read full Disclosure.

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