NEW YORK (AP) -- OpenTable's stock jumped more than 15 percent on Friday after the company's second-quarter results topped Wall Street's estimates.
THE SPARK: Late Thursday OpenTable, a provider of online restaurant reservations, reported adjusted earnings of 42 cents per share on revenue of $39.6 million. Analysts polled by FactSet forecast earnings of 37 cents per share on revenue of $39.4 million.
Investors were also likely pleased that the number of reservations the San Francisco company handled during the quarter rose 27 percent. Most of those reservations were in North America. It also posted an 11 percent gain in the number of restaurants where its services are available.
OpenTable operates websites that are free to diners. It makes its revenue by charging restaurants a fee to install its software and electronic reservation book plus monthly subscriptions and a fee for every diner seated after making an online reservation.
THE ANALYSIS: Shawn Milne of Janney Capital Markets said OpenTable's quarterly results were solid and its North American growth was better than expected. But the analyst kept a "Neutral" rating and $39 price target, saying in a client note that there's the possibility that the growth in the number of diners seated will slow. He is also remaining on the sidelines while the company continues to invest overseas.
Citi Investment Research's Mark Mahaney said OpenTable's quarterly performance was a step in the right direction, given that some industry experts feared that its results would fall short of expectations. But the analyst was concerned about the company adding only 620 restaurants in North America during the period, which was among the lowest number of additions for a quarter in more than two years.
Mahaney reiterated a "Buy" rating and lowered OpenTable's price target to $51 from $53.
SHARE ACTION: Shares of OpenTable Inc. added $5.25, or 15.4 percent, to $39.40 in morning trading. The stock has traded in a 52-week range of $31.54 to $67.72. For the year to date, the shares are off 14 percent.