Synchronoss Technologies in bullish flag

Synchronoss Technologies (NASDAQ:SNCR) provides transaction management software used by communications service providers. The company's flagship ActivationNow platform allows clients to manage such tasks as service activation, changes to service plans and the management of wireline, wireless and IP services across existing networks. Synchronoss clients include AT&T, Cablevision, Cingular Wireless, Level 3 Communications, Time Warner Cable, Verizon Business Solutions and Vonage.

Synchronoss had good news for investors earlier in the week, when it announced that its ActivationNow software had been selected by Cingular to provide transaction order management for the new Apple (NASDAQ:AAPL) iPhone. The firm also guided Q4 EPS to 11-12 cents (10 cent consensus), Q4 revenues to $20.2-$20.5 million ($21.75M consensus), FY07 EPS to 44-48 cents (44 cent consensus) and FY07 revenues to $99-$100 million ($99.94M consensus). The quarterly revenue expectation was a little light, but that was apparently forgiven. Deutsche Securities reiterated its "buy" rating on the issue and boosted its price target to $20. SNCR shares popped on the news and then began formation of a bullish "flag" pattern. Stocks frequently exit a flag with a move in the same direction they were traveling when they entered it. In this case, that would be to the upside.

Altogether, brokers recommend the issue with three "buys" and one "hold". Analysts see a 42 percent growth rate, through the next year. The stock's Sales Growth rate (33.97%), Net Profit Margin (18.63%), Revenue per Employee ($559k) and Net Income per Employee ($104k) compare favorably with industry and sector averages. Institutional investors hold about 22 percent of the outstanding shares. Over the past 52 weeks, SNCR has traded between $6.25 and $17.47. A stop-loss of $14.60 looks good here. Note that the firm is expected to report Q4 results in early February.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.