NEW YORK (
) -- Shares of
soared to new highs on Friday after the Provo, Utah-based company beat Wall Street expectations for its first-quarter results, gave a bullish outlook, and announced a $125 million buyback program.
The news got rave reviews from analysts, who praised subscriber growth at the provider of online family history services and noted the lift the business is getting from being
"We believe that the stock is attractively priced given the underlying growth rates, and we continue to expect strong operating leverage as the company grows its subscriber base and benefits from a stronger marketing campaign boosted by the success of Who Do You Think You Are?," said BMO Capital Markets in a note issued prior to the opening bell.
The firm reiterated an outperform rating with a 12-month price target of $42 on Ancestry.com, and lifted earnings estimates.
The stock jumped 39% to $44.29 on volume of 8.7 million, more than 14 times the issue's three-month daily average of less than 600,000, after Ancestry.com reported earnings of $9 million, or 18 cents a share, for the three months ended in March as revenue grew more than 40% year-over-year to $91 million.
The numbers, which were released after Thursday's closing bell, was well ahead of the average estimate of analysts polled by
for a profit of 15 cents a share on revenue of $86.8 million in the March period.
The company finished the quarter with 1.62 million subscribers, up 33% from a year ago, and 16% on a sequential basis.
For the second quarter, Ancestry.com forecast revenue of $98 million to $100 million, subscriber growth to 1.67 million, and adjusted EBITDA
earnings before interest, taxes, depreciation and amortization of $35 million to $37 million. Wall Street's current consensus estimate is for revenue of $93.1 million in the June-ending period.
The company also lifted its full-year outlook to revenue of $395 million to $400 million from a previously projected range of $370 million to $375 million.
Canaccord Genuity reiterated a buy rating on the stock as well and lifted its 12-month price target by 10% to $44 from $40. The firm said the stock was undervalued in comparison to its peer group early Friday, but that was before the huge ramp in the shares.
"At 21x 2012E EPS vs. the group at 32x, we continue to believe that Ancestry has significant growth and margin expansion opportunities from growing awareness of the brand and category, international expansion, and improving subscriber economics," the firm said.
Ancestry.com itself underlined its belief in the value of the stock with the buyback program, which will run through the end of April 2012.
"The decision to initiate this new share repurchase program reflects our confidence in our business model and growth prospects," said Tim Sullivan, the company's CEO, in a statement. "Ancestry.com's solid financial performance, demonstrated by our healthy balance sheet and strong free cash flow generation, allows us to continue investing in our business while also returning capital to stockholders."
Jefferies was the third firm to reiterate its buy rating on Ancestry.com. It also lifted its price target to $42 and lifted estimates as well, saying the robust subscriber growth could be an indication of greater potential for the business.
"ACOM concluded an impressive 1Q with results beating expectations onvirtually every metric," the firm told clients. "Record net sub adds reflect strong performance from the WDYTYR TV show and an addressable market for family genealogy that's perhaps larger than most believe."
Prior to Friday's run-up, Ancestry.com shares were up 13% so far in 2011. Wall Street was already very bullish on the stock ahead of the report with the 10 analysts covering the stock all rating it at either strong buy (7) or buy (3).
Written by Michael Baron in New York.
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