CHARLOTTE (Dow Jones)Shares of SFBC International Inc. (SFCC) fell 8.4% Thursday after the company reported a 65% increase in net income. An analyst attributed to drop to confusion over the company's 2001 outlook.
Howard Brous, chairman of H.D. Brous & Co. of Great Neck, N.Y., which served as underwriter of SFBC's October 2000 initial public offering, said investors are mistakenly interpreting the fullyear outlook given in the thirdquarter earnings release as a reduced outlook.
A spokeswoman for the Miami company said she had "no clue" as to why shares were down. The company, which provides outsourced earlystage drug development research services for the pharmaceutical and biotechnology industries, was scheduled to host an 11 a.m. EST conference call to discuss earnings.
The company said it expects 2001 net revenue to be better than 60% higher and net income to be 80% higher than last year. Brous said that guidance is consistent with guidance the company gave during an Oct. 1 presentation at a Raymond James & Co. conference. But it differs from a Sept. 5 release, in which the company said it expected a 50% increase in 2001 revenue and a 100% boost in net income.
He said an increase in the company's shares outstanding accounts for both the different outlook and the misunderstanding among investors. SFBC reported 5 million average shares outstanding for the third quarter, compared with 4.5 million in the second quarter. A year ago, the company had 2.4 million shares outstanding, which has more than doubled due to the call and exercise of warrants, company stock options being in the money and last year's initial public offering.
Thirdquarter net income rose 65% to $838,000 and revenue rose 38% to $8 million from a year earlier. Diluted earnings per share, however, fell 19% to 17 cents from 21 cents.
"The numbers were actually very good," Brous said.
SFBC shares recently were down $1.72 to $18.76 on Nasdaq volume of 184,000 shares. Average daily volume is 81,400 shares. The stock traded as low as $17.15 Thursday.
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