eResearch shares jump after earnings growth report

eResearch shares jump a day after report of 4Q earnings growth, 2012 forecast

Associated Press

Shares of eResearch Technology Inc. soared 17 percent Tuesday, a day after the medical technology services provider said its fourth-quarter earnings jumped nearly 10 percent on strong revenue growth.

THE SPARK: The Philadelphia company said Monday after markets closed that it earned $4.5 million, or 9 cents per share, in the three months that ended Dec. 31. That compares with $4.1 million, or 8 cents per share, a year earlier. Revenue grew 16 percent to $52.3 million.

The company said it had strong contract bookings for its cardiac safety and respiratory businesses. Service revenue rose to $27.7 million from $26.3 million and site support revenue grew 32 percent, to $24.6 million from $18.6 million.

In the current quarter, the company expects to earn 8 to 11 cents per share, excluding one-time items, and forecasts $46 million to $49 million in revenue. For the full year, eResearch expects adjusted profit of 45 cents to 53 cents per share on $195 million to $203 million in revenue.

THE BIG PICTURE: eResearch provides technology and services that help medical device and drug companies interpret data related to cardiac safety.

THE ANALYSIS: The company has been investing in growing its revenue base, Citi analyst George Hill said in a research note. He wrote that the growth appears to be materializing this year, but it remains to be seen whether the increased revenue will remain once selling, general and administrative and other operating expenses go away.

"We believe management is smartly laying the groundwork for when (research and development spending) by clients rebounds more substantially," Hill wrote.

SHARE ACTION: Up 95 cents, or 17.1 percent, to $6.51 by mid-afternoon, while broader indexes rose slightly.

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