Shares of National Financial Partners Corp. jumped Wednesday after an analyst said the company's addition to the Standard & Poor's SmallCap 600 index should result in a short-term boost to the stock.
Shares rose $1.30, or 5.5 percent, to $25.05. The stock has traded between $16.87 and $56.75 in the past 12 months.
Late Tuesday, S&P said the financial advisory firm will replace LifeCell Corp. in the index, which includes companies with market capitalizations between $300 million and $2 billion, after the close of trading on Friday.
Citi Investment Research analyst Keith F. Walsh said he expects the addition to the index to spark the potential purchase of about 2.4 million shares, or three times the company's average daily trading volume.
"We expect National Financial Partners' shares to deliver a solid short-term, index-driven rally," Walsh wrote in a note to investors.
Stocks added to such indexes typically gain as mutual funds and other investors that track the index adjust their portfolios.
Walsh also pointed to a number of near-term catalysts that could drive the stock higher, including the company's investor day on June 4, the pending announcement of a new chief financial officer and share repurchases.
"The company is not in the clear," he said, "but for the stock to work, it does not need to post great results, just steady progress from current disappointing levels."
Walsh reiterated a "Buy" rating and a $30 target price on the stock, implying he expects the stock to rise about 26 percent in the next year, from Tuesday's closing price of $23.75.
UBS Securities analyst Andrew Kligerman also reiterated a "Buy" rating on the shares, following a presentation by Chief Executive Jessica Bibliowicz at a UBS-sponsored financial services conference. Kligerman said Bibliowicz seems confident in delivering 6 percent to 9 percent long-term same-store sales growth. However, she cautioned that near-term sales could be volatile given current market conditions, Kligerman said.
National Financial Partners brokers life insurance and other investment products to wealthy clients. Last week, the New York-based company said its first-quarter income rose 18 percent to $10 million on a 17 percent increase in revenue.
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