Freshworks Inc. Stock May Be Poised for Recovery After Recent Drop
Freshworks Inc. (FRSH) has been experiencing significant selling pressure, leading to an 18.8% decline over the past four weeks. However, market conditions suggest that the stock is in oversold territory, positioning it potentially for a trend reversal. Analysts on Wall Street expect the company to deliver better earnings than previously forecasted.
Understanding Oversold Stocks
A popular tool for identifying oversold stocks is the Relative Strength Index (RSI). This momentum oscillator evaluates the speed and change of price movements.
RSI values range from zero to 100, with levels below 30 typically indicating that a stock may be oversold.
Stocks fluctuate between being overbought and oversold, regardless of their underlying fundamentals. The strength of the RSI helps investors quickly assess whether a stock’s price is nearing a reversal point.
If a stock is undervalued due to excessive selling pressure, it may present entry opportunities for investors hoping to benefit from a rebound. However, like any investment tool, the RSI has its limits and should not be the sole basis for investment decisions.
Indicators of a Potential Trend Reversal for FRSH
The recent heavy selling of FRSH shares seems to be losing momentum, as indicated by its RSI reading of 20.42. This low value suggests that the stock may soon reverse its trend and approach its previous equilibrium of supply and demand.
Beyond the RSI, there are additional factors signaling a potential turnaround for FRSH. There is notable consensus among analysts covering the stock, with earnings estimates for the current year raised by 21.3% over the last month. Typically, an upward trend in earnings estimate revisions correlates with price appreciation in the near term.
Furthermore, FRSH holds a Zacks Rank of #2 (Buy), ranking it among the top 20% of over 4,000 stocks analyzed by earnings estimate trends and EPS surprises. This ranking strengthens the evidence of the stock’s recovery potential. For additional insights, you can view today’s Zacks Rank #1 (Strong Buy) stocks here >>>>.
(This article has been reissued to correct a mistake. The original article released on March 11 should no longer be referenced.)
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This article was originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
