Perfect World jumps after company ups 2Q outlook

Perfect World Co. shares jumped Friday after the Chinese online gaming company said it raised its second-quarter sales guidance despite the impact of the recent earthquake, due to better-than-expected results from new expansion packs and recent marketing campaigns.

Perfect World American Depositary Shares rose $3.26, or 14.9 percent, to $25.15. Since the company began trading publicly in July, it has traded between $17.40 and $37.

Beijing-based Perfect World said early Friday that it now expects revenue between 333 million yuan ($48.3 million) and 348 million yuan ($50.5 million) in the quarter, which would represent a sequential climb of 10 percent to 15 percent. This compares with earlier guidance for revenue that is either flat sequentially or increases up to 5 percent.

Analysts polled by Thomson Financial expect $44.2 million in revenue.

Like its peers, Perfect World stopped operations for three days during the quarter as part of a national mourning period after the May 12 quake in Sichuan province.

In a client note Friday, Roth Capital Partners analyst Adam Krejcik said the company's adjusted view is consistent with his checks, which led him to think that the impact of the earthquake and three-day service stoppage will be "fairly limited."

"We view today's news as a major catalyst not just for Perfect World but the entire sector, which has been under pressure recently," said the analyst, who rates the stock "Buy" with a $36 price target.

Krejcik had lowered his price target by $1 and reduced his 2008 and 2009 estimates for Perfect World on Thursday, citing concerns of a heightened cost structure. But he said Friday that the company's raised outlook makes his change seem somewhat pre-emptive.

The analyst raised his second-quarter earnings per ADS estimate back to his pre-Thursday amount of 38 cents per share, and increased his 2008 earnings per ADS estimate to $1.61, which is a bit higher than what he expected before Thursday.

He also raised his 2009 earnings per ADS estimate to $2.15, but kept it a few cents below his pre-Thursday estimate.