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| Friday, August 04, 2006 |
Cbeyond 2Q Profit Jumps, Driven by New Customers, Higher Sales
Shares of Atlanta-based Cbeyond Inc., which provides broadband Internet access for small businesses, soared in Friday afternoon trading, after the company reported a second-quarter profit, and analysts applauded the results.
The stock jumped $3.41, or 19 percent, to $21.31 on the Nasdaq, after earlier changing hands as high as $23.54. In the past 52 weeks, the stock has traded in a range of $9.45 to $24.80.
Late Thursday, Cbeyond reported profit of $1.4 million, or 5 cents per basic share, against a loss of $3.4 million in the year-ago period, when the company was still privately held. Cbeyond did not provide earnings per share figures on a diluted basis.
Revenue rose nearly 38 percent to $52.5 million from $38.2 million a year ago.
Wall Street expected a loss of a penny a share on sales of $50.4 million, according to a poll of analysts by Thomson Financial.
The 2006 second quarter included a $900,000 gain and $1.3 million in stock-based compensation expenses.
Adjusted earnings excluding interest, taxes, depreciation and amortization were $9.4 million, compared to $5.8 million in the second quarter of 2005.
Cbeyond raised its 2006 revenue guidance to at least $212 million from a minimum of $206 million. That's above the Wall Street average forecast of $208.8 million, according to Thomson Financial.
Analyst Frank G. Louthan of Raymond James raised his rating on the shares to "Strong Buy" from "Market Perform" and upped his price target on the stock to $25, calling the results "impressive."
"We view Cbeyond's application development capabilities as crucial to differentiating itself in the competitive marketplace, and believe recent trends indicate the company is successfully executing its strategy of developing new applications to meet customer demand," Louthan said, noting that applications per customer increased 5 percent during the quarter.
Looking ahead, Louthan also expects the percentage to balloon as the company rolls out new applications and wireless services.
Louthan hiked his 2006 earnings per share figure to a profit of 17 cents from a loss of 5 cents, and his revenue estimate to $213.5 million from $206.5 million, respectively.
ThinkEquity analyst Jonathan Hoopes reiterated a "Buy" rating and $30 price target. "Cbeyond's strong execution has accelerated the company's expansion efforts, as management indicated it plans to further expand into a third new market in 2007 relative to our expectation for two additional markets," Hoopes said in a client note.
Merriman Curhan Ford analyst Colby Synesael called the stock undervalued and raised his 2006 revenue estimate to $215.7 million from $209.4 million, with 2006 sales of at least $212 million. For 2007, Synesael expects revenue of $284.3 million, up from a previous call of $275.8 million.
"Although we believe we are properly reflecting the addition of a third market, our estimates may prove too conservative." Synesael said. He kept a "Buy" rating on the stock. |
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