Why New Relic's Stock Jumped 25% in January

What happened

Shares of New Relic (NYSE:NEWR), the software-as-a-service company, rose 25.5% last month, according to data provided by S&P Global Market Intelligence, after an analyst upgraded the company's stock and raised its price target.

So what

New Relic's share price was slowly climbing in January, but it received a big boost in the middle of the month after Morgan Stanley analyst Sanjit Singh upgraded the company's stock from Equal Weight to Overweight and increased the stock's price target from $100 to $110.

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Singh said that New Relic should experience solid sales growth over the next few years, mainly due to the company's app services software. New Relic's software allows companies to track how well their apps are performing, which is a growing market called application performance management that could become a $9 billion market by 2023. The company is a leader in this space right now, and Singh expects New Relic's lead to expand.

Now what

New Relic's share price has slipped about 1.5% this month as of this writing. The company's share price had gained nearly 4% in the month, but the stock fell after New Relic released its third-quarter 2019 results. Sales increased 35% from the year-ago quarter to $124 million, but that wasn't enough to make investors happy. The company's share price has been very volatile over the past year, and investors can likely expect more of the same as the company continues to grow into the burgeoning app performance management market.