Why Infoblox Shares Surged

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 automated network control company Infoblox (NYSE: BLOX  ) soared 17% today after its quarterly results and guidance topped Wall Street expectations.

So what: The stock was hammered in October on concerns over spiking costs, but strong second-quarter results -- EPS of $0.06 on a revenue increase of 32% -- coupled with upbeat full-year guidance reinforces recent optimism that the bottom-line pressure is easing. In fact, both gross and operating margins during the quarter exceeded management's expectations, giving investors plenty of good vibes over profitable growth going forward.

Now what: Management now sees 2013 EPS of $0.21-$0.26 on revenue of $216 million-$219 million, versus Wall Street's view of $0.20 and $208.4 million, respectively. "Not only are we pleased with our financial performance, but we also expanded our total addressable market and increased the opportunity within our existing customer base," CEO Robert Thomas said. "Looking ahead, we are confident in our ability to execute and expect a strong second half in fiscal 2013." With the stock once again flirting with its 52-week high and trading at a forward P/E of 60, however, there isn't much room for error.

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