I would bet that the price will revert back to the 37 to 38 range run up just prior to earnings and then move up from there to reflect growth prospects. I have no particular reason or rationale for my prediction just that the price of a stock should represent, according to the street, the underlying value of a company based on future growth in earnings times a multiple. The opinions I have read including the the recent Smart Money article suggest that this company is cheap trading just under 20x07' earnings. If this is the consensus then the price will adjust.
What I don't get is why the analysts covering this company didn't make any comments after the CC and given the price movement after earnings. I just to don't get it. Now that's illogical!
There were quite a few analyst comments on NCTY. A couple were a little more bearish because the tax rate came up and due to the marketing spend going up for the next couple of quarters and the slight seasonality in the 1Q. Other bullish comments mentioned the continuing strength of WoW, the blockbuster pipeline for 08 and 09 and the possibility of EPS upside if Guild Wars or Sun are successful. Burning Crusade will have a marketing package attached to it so margins might be weaker even as revenues spike when the expansion is released. NCTY had good operating expense control in this quarter and is seeing good utilization even with a 7th server farm.