Matria ( MATR), one of the nation's largest disease-management companies, has gotten some of its own problems under control.

First -- and perhaps most important -- Matria has proved that the company can hit its targets if it sets realistic goals. After devastating investors in the past, Matria easily topped lowered profit expectations for the second quarter. The company posted net income of $7.23 million, up 42% from a year ago, with earnings per share of 22 cents topping the consensus estimate by 4 cents.

In addition, Matria finally found a buyer for one of two companies it must sell in order to transform itself into a pure-play disease-management outfit and reduce its hefty debt load. The company borrowed big for its acquisition of rival CorSolutions, a deal that sparked high hopes but has been riddled with challenges.

Investors, clearly relieved, sent Matria's stock up 3.5% to $25.66 on Thursday following the positive news.

"It has been six months since we started our integration initiatives involving CorSolutions," Matria CEO Parker Petit announced in the company's earnings release late Wednesday. "Our strategy was to complete our integration initiatives expeditiously so the anticipated profit improvements and synergies could be realized quickly. We have successfully achieved that goal."

To be sure, Matria still faces its share of hurdles. While other metrics looked strong, revenue -- perhaps the most crucial number of all -- fell a bit shy of Wall Street's projections. Following its acquisition of CorSolutions, Matria nearly doubled second-quarter revenue to $82.6 million, but it still missed the $83 million consensus estimate.

Now, looking ahead, Matria must ramp up its revenue growth significantly in order to hit its projections for the full year.

"Same old song," UBS analyst Justin Lake declared late Wednesday. Matria's "full-year guidance is back-end loaded."

Lake has maintained his neutral rating and $25 price target on Matria's stock. His firm counts the company among its investment banking clients.

The Big 'If'

Stifel Nicolaus analyst Thomas Carroll has expressed more faith in the company.

"We acknowledge that negative sentiment rightfully surrounds the organization given recent management defections, lowered guidance and problems with the CorSolutions integration," Carroll wrote just ahead of Matria's latest earnings release. "Nonetheless, the company remains one of the industry leaders at a time when consolidation has lowered the number of competitors and the size of the opportunity increases. ... If one assumes that Matria has finally achieved conservatism in its guidance -- a big 'if' -- and comes to appreciate the very trite, but appropriate in this case, adage to under-promise and over-deliver, then the next focus is future growth."

Carroll has a buy recommendation and a $30 target price on Matria's stock. His firm hopes to secure investment banking business from the company over the next three months.

In the meantime, Matria reaffirmed its guidance for 2006 and announced its business wins so far for 2007. The company still plans to generate revenue of $337 million to $341 million this year. Given first-half results and third-quarter forecasts, the company may need to deliver more than $90 million in revenue during the fourth quarter -- well above its current run rate -- in order to hit its target.

Still, management sounded a bit more convincing than it did when questioned about those goals last month. Notably, company leaders stressed that most of that fourth-quarter revenue has already moved out of the pipeline and turned into actual backlog.

They also said that they had renewed a high-profile client -- believed to be IBM -- and have lost no major accounts in the meantime. Looking further ahead, they said the company has secured another $5.8 million worth of brand-new business for 2007. They plan to issue comprehensive 2007 guidance at the end of the year.

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