Healthways Inc. shares soared Friday after the specialty health care company's reported a smaller loss for the first quarter and higher revenue than analysts had anticipated.
THE SPARK: Healthways reported Thursday that it had lost $3.9 million, or 12 cents per share, for the quarter versus a loss of $2.7 million, or 8 cents per share, a year ago. Revenue was flat at $165.2 million.
Analysts polled by FactSet were expecting a larger loss of 15 cents per share on lower revenue of $162.1 million.
The company stood by its full-year forecast, saying it anticipates earnings between 25 to 35 cents per share. It forecast annual revenue between $710 million to $750 million. Analysts expected earnings of 29 cents per share on revenue $726.8 million.
THE BIG PICTURE: Healthways, based in Franklin, Tenn., provides wellness and disease prevention services for patients via health plans, hospitals, government programs and others.
THE ANALYSIS: Stifel analyst Thomas A. Carroll said the company expects to show earnings power over the next six quarters as new contracts are implemented and mature. The analyst said that the company's second and third quarter results must show sequential improvement, however.
Carroll raised the target price on Healthways shares to $19 from $13 and reiterated a "Buy" rating.
SHARE ACTION: Shares jumped nearly 17 percent to $12.88 by late afternoon Friday. Shares hit as high as $13.17 earlier in the day, nearing the top end of the company's 52-week trading range of $6.21 to $13.24.