DoubleClick Jumps on Higher Guidance

Updated from Jan. 28

DoubleClick (DCLK - Cramer's Take - Stockpickr) surged 12% early Thursday after boosting 2004 earnings guidance.

The rally started after the market closed Wednesday, when the New York direct marketing technology company posted a fourth-quarter profit and boosted first-quarter targets.

For the quarter ended Dec. 31, DoubleClick reported earnings of $3.8 million, or 3 cents a share, on revenue of $73 million. That reverses the year-ago loss of $54 million, or 40 cents a share, on revenue of $66 million. The latest-period results beat the Wall Street analyst consensus estimate, which had called for earnings of 2 cents a share on revenue of $70 million.

"2003 was our first full year of GAAP profitability," said CEO Kevin Ryan. "The fourth quarter of 2003 was our best ever in terms of cash flow from operations, which was 33% of revenues. We feel confident enough to raise guidance for 2004."

Indeed, the company boosted its earnings target to around 30 cents on revenue of about $300 million for the coming year. Analysts had forecast EPS of 28 cents and revenue of $293 million. The company also nudged first-quarter targets higher, saying it would earn 3 cents to 6 cents a share on revenue of $70 million.

There was much bullishness Thursday.

"We believe DoubleClick's 4Q signals an important inflection point," CIBC analyst Michael Gallant said in a Thursday morning research note. "Earnings growth in the past year has been driven completely by cost reductions, rather than revenue growth, evoking skepticism on the long-term growth prospects of the company. However, 4Q marked the first quarter of earnings upside driven by better-than-expected revenue, as Technology revenue grew Y/Y for the first time since the second quarter of 2001, posting a 7.5% increase in 4Q."

CIBC rates the stock sector outperform and boosted its 12-to-18-month price target Thursday morning to $14 from $12.

In early Thursday action, DoubleClick surged $1.26 to $11.60.