Shares of Target Hospitality (TH -0.39%) soared 16% on Wednesday after the workforce lodging company announced better-than-expected quarterly results and a new contract award.

On the former, Target Hospitality's third-quarter 2023 revenue declined 8.5% year over year to $145.9 million, translating to generally accepted accounting principles (GAAP) net income of $45.6 million, or $0.43 per share. Analysts, on average, were expecting slightly lower net income on revenue of $140.8 million.

Target Hospitality's extended contract, balance sheet progress

Target Hospitality also announced a new contract award for the Influx Care Facility (ICF) located at Target's Pecos Children's Center community. The award was given to Target's non-profit partner on Nov. 6, 2023, is a continuation of a five-year contracting vehicle established this past March, and gives the U.S. government the ability to continue offering services at the Pecos Children's Center through 2028. While the contract specifications have yet to be finalized with the non-profit partner, Target Hospitality expects to provide additional details in the coming weeks.

Target management also lauded progress in improving the company's balance sheet, predicting the company will be net-debt-free with total available liquidity exceeding $315 million by the end of 2023. As such, the company says it's continuing to actively evaluate "an expanding pipeline of strategic growth opportunities and seeks to allocate over $500 million of net growth capital through 2027."

What's next for Target Hospitality investors?

In the meantime, Target Hospitality reiterated its previous outlook for full-year 2023 revenue between $550 million and $580 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $346 million and $365 million. Most analysts on Wall Street were less optimistic coming into this report, with consensus estimates predicting 2023 revenue near the low end of Target Hospitality's guidance range.

In the end, from its better-than-expected third quarter to its solid forward guidance and big plans to drive growth in the coming years, there was little not to like in this update from Target Hospitality. With shares down more than 20% in the past month as of yesterday's close -- likely amid concerns over the impact of broader macroeconomic uncertainty on its business -- it's no surprise to see Target Hospitality stock rallying in response today.