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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 bio-defense company Emergent BioSolutions (NYSE: EBS ) are shooting higher by 12% today following the company's fourth-quarter results and 2012 guidance.
So what: For the quarter, Emergent reported a profit of $0.80, beating Wall Street's expectations by $0.06. Revenue of $107.9 million fell slightly short of expectations. For fiscal 2012, Emergent is forecasting total revenue to range between $280 million and $300 million with net income of $15 million to $25 million. This also fell short of what the Street had been expecting. Emergent did, however, procure a multi-year contract with the CDC to supply 44.75 million doses of its inhalation anthrax vaccine, BioThrax, at a cost of up to $1.25 billion.
Now what: It's always confusing when a company guides estimates lower and the stock reacts higher. In Emergent's case I feel it's the fact that things aren't nearly as bad as everyone had been predicting. Earlier this week, I highlighted Emergent as a stock near its 52-week low that could be worth buying, and so far that looks like a decent call. Emergent doesn't exactly have a cakewalk in inhalation anthrax. PharmAthene is developing SparVax as a direct rival and Human Genome Sciences has its own anthrax treatment, ABthrax. Still, Emergent seems like a solid biodefense play for the future, even after its lower-than-expected forecast, and I'm standing behind my CAPScall recommendation of outperform on the stock.
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