Why is the Nitro Software share price rallying 5%?

Tech shares are showing signs of life again on Monday.

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Key points

  • Nitro Software shares are rallying on Monday despite no market-sensitive news 
  • In wider market moves ASX tech shares are also rallying, indicating strengths in the broad sector 
  • In the last 12 months, the Nitro Software share price has clipped more than 48% into the red 

Shares of Nitro Software Ltd (ASX: NTO) are shifting higher on Monday and now trade 4.71% higher at $1.335. Earlier, the Nitro share price was as high as 7%.

Despite no market-sensitive updates today, the Nitro Software share price has surged hard from the open alongside many other tech names.

In wider market moves, the S&P/ASX All Technology Index (ASX: XTX) is also up 1.79% as investors show confidence in tech shares once again.

What's up with the Nitro Software share price?

Shares in Nitro have oscillated in recent weeks and have been trading in a fairly narrow range of $1.59 to $1.13 per share, a roughly 20% spread.

In that time, tech shares have embarked on a gyrating ride as well, recently coming off a rough period marred by volatility.

As such Nitro has seen both its stock price and valuation take a lunge backwards in recent weeks, with a string of brokers reducing their price targets on the company.

Each of UBS, Bell Potter, Goldman Sachs and Jarden cut their price target on the stock by 5%–25% to start the month.

Meanwhile, analysts at Shaw & Partners increased their valuation of the company by 8% to $2.70 per share. Morgan Stanley also retained its buy rating in a recent note, although trimmed its price target by over 40% to $2.30 in the process.

The broker noted it had revised its earnings targets for Nitro given a large drop in similar names and a reduced earnings guidance, but this was offset by its view on Nitro's e-signing capacity – especially via the company's PDF software.

Forager Funds is also opting to keep ahold of the stock, according to a recent TMF analysis from Tony Yoo.

"Trends in revenue growth for all three remain at least in line with expectations, ranging from 24% at Whispir (using the recurring component of its revenue only) to more than 40% at Nitro," Forager said, cited by TMF.

And the investment manager isn't against the grain here either – 100% of analysts have Nitro Software rated as a buy right now, according to Bloomberg data.

The consensus price target from this list is $2.57 per share, indicating an upside potential of 127% should the bull thesis pull through.

Nitro Software share price snapshot

In the last 12 months, the Nitro Software share price has clipped more than 48% into the red after another 46% dip this year to date.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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