BOSTON (Thomson Financial) - Shares of Navigant Consulting Inc. rallied
Friday after the Chicago-based specialty consulting firm reported
stronger-than-expected fourth-quarter earnings and revenue.
The stock surged 29.7% to $15.07 on volume of 2.9 million shares, well above
the issue's 30-day average volume of 454,000.
Navigant late Thursday reported adjusted fourth-quarter income of $10.3
million, or 22 cents a share, topping the mean estimate of analysts polled by
Thomson Financial of 14 cents a share.
Revenue for the three months ended Dec. 31 totaled $203.3 million, above
Wall Street's $188.3 million consensus estimate.
Piper Jaffray reiterated its buy rating and raised its price target on the
stock to $18 from $16, calling the financials "significantly better" than
expectations.
"Navigant is benefiting from positive secular growth drivers including an
increasingly complex and more regulated business environment, a more litigious
society, and Sarbanes Oxley conflicts arising at Big Four accounting firms,"
Piper Jaffray said.
Piper Jaffray also raised its 2008 revenue estimate for Navigant to $834
million from $812 million, and its full-year earnings estimate to 92 cents a
share from 87 cents a share.
Merrill Lynch, however, maintained a neutral rating on the stock despite
saying Navigant made progress in the fourth quarter and management's
restructuring effort appears to be having a "positive impact" on utilization and
margins.
"We see attractive long-term value emerging," Merrill Lynch said, "but it
may be too early to take a more constructive stance on the stock, in our view."
The firm noted that the company's deal-related and discretionary practices
would be impacted by a recession and said an increasing amount of litigation and
investigation work appears to be coming directly from corporate clients, while
Navigant's focus has historically been on generating leads through its strong
relationships with law firms.
Merrill Lynch estimates 2008 earnings of 90 cents a share. Analysts surveyed
by Thomson Financial, on average, estimate full-year earnings of 86 cents a
share on revenue of $813.3 million.
Greg Saulnier
gs/jw
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