Friday, April 26, 2013

Why LogMeIn Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of software company LogMeIn (NASDAQ: LOGM  ) soared 21% today after its quarterly results and outlook topped Wall Street expectations.

So what: The stock has been crushed over the past year on weak revenue growth, but a first-quarter beat -- adjusted EPS of $0.12 on revenue of $37.4 million versus the consensus of $0.10 and $36.3 million -- combined with upbeat guidance suggests that things are starting to turn around. In fact, the company drew in a record 2.7 million first-time users, and 37,000 new premium subscribers during the quarter, allaying some of the concern recently over intensifying competitive pressure.

Now what: Management now sees full-year adjusted EPS of $0.46-$0.50 on revenue of $157 million-$160 million, nicely ahead of Wall Street's view of $0.46 and $155.1 million. "[W]e expect to build on this momentum by introducing two new cloud offerings -- developed on our proven Gravity cloud platform -- that we believe will provide a catalyst for accelerating growth in 2013 and beyond," said CEO Michael Simon. "As a result, we've increased our full-year outlook." When you couple today's price surge with the company's still-speculative nature, however, buying into that bull talk doesn't seem prudent at this point.  

Interested in more info on LogMeIn? Add it to your watchlist.

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