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Questcor skyrockets following stronger 2Q report

NEW YORK (AP) -- Shares of Questcor Pharmaceuticals Inc., the maker of H.P. Acthar gel, surged to all-time highs Wednesday after its second-quarter results surpassed Wall Street's estimates.

THE SPARK: Questcor said Tuesday after the market closed that its net income grew 67 percent to $69.1 million, or $1.12 per share. Revenue rose 64 percent to $184.6 million.

Analysts were expecting net income of 99 cents per share on $169 million in revenue, according to FactSet.

The company said shipments of H.P. Acthar gel, rose 50 percent to 7,050.

THE BIG PICTURE: H.P. Acthar gel, Questcor's main product, is used to treat more than a dozen conditions, including multiple sclerosis in adults and infantile spasms. The Anaheim, Calif., company said more physicians prescribed Acthar for rheumatology conditions like rheumatoid arthritis and systematic lupus.

Health insurer Aetna said in September that it would stop covering all uses of Acthar except infantile spasms because there was not enough evidence that Acthar was more effective than steroids for those conditions.

Aetna's announcement had caused Wall Street to worry that other insurers will also reduce their coverage of Acthar and diminish Questcor's revenue, hurting the stock price. But shares have recovered.

THE ANALYSIS: A bigger rheumatology sales force benefited Questcor's sales, said Janney Capital Markets analyst Jim Molloy. He raised his earnings estimates on Questcor through 2014 and lifted his price target on the shares by $10 to $65.

"We believe that this strength in numbers will continue to benefit overall prescription numbers," Molloy wrote.

SHARE ACTION: Questcor stock advanced $15.31, or 30 percent, to $67.22 in afternoon trading. The shares fell to a 52-week low of $17.25 in September and hit a record high of $68.08 on Wednesday.