Stamps.com shares jump with 1st-quarter profit growth

Shares of Stamps.com Inc. jumped Thursday after the online postage retailer reported its first-quarter profit climbed on higher subscription revenue and a $3.7 million tax gain.

The stock rose $1.71, or 15.7 percent, to $12.59 in midday trading. In the past year, it has traded between $8.47 and $14.71.

Late Wednesday, Stamps.com said it earned $5.2 million, or 26 cents per share, compared with $3.1 million, or 14 cents per share, in the year-ago quarter. On an adjusted basis, which excludes the income tax benefit and other items, Stamps.com earned 14 cents per share.

Revenue rose to $21.1 million from $20 million.

Analysts polled by Thomson Financial expected earnings of 8 cents per share on $19.9 million in revenue. Analyst estimates generally exclude special items.

Stamps.com said its subscription revenue rose 11.2 percent to $15.2 million. The company's PhotoStamps revenue declined 5.4 percent to $3 million. PhotoStamps are stamps that users can customize with their own photos.

The company also recorded a $3.7 million income tax benefit related to the reversal of a portion of its net deferred tax asset valuation allowance.

Stamps.com revised its 2008 earnings outlook to a range of 58 cents to 68 cents per share from an earlier prediction for 60 cents to 70 cents per share. On an adjusted basis, the company still expects income of 60 cents to 70 cents per share.

The company also reiterated its earlier guidance for revenue of $80 million to $90 million.

Analysts anticipate a profit of 57 cents per share on $85.5 million in revenue.

Craig Hallum Capital analyst George Sutton said in a client note that the company's results beat his expectations. He also noted the profitability of the PhotoStamps unit improved since its marketing budget was cut almost in half but its sales only declined 5 percent.

The analyst said his near-term excitement on the stock is tempered by several factors, including the expectation of upcoming legal expenses _ Stamps.com is on the defense in one patent lawsuit and the plaintiff in another.

Sutton, who rates the stock "Accumulate" with a $13 price target, lowered his second-quarter adjusted earnings-per-share estimate to 11 cents from 15 cents and cut his revenue estimate to $20.1 million from $20.8 million.