eResearch Ends Tough Year With Two Analyst Upgrades

Simply put, eResearch Technology Inc. (ERES) has had a rough year. The share price has fallen from about $15 earlier in the year and recently hit a 52-week low of $5.88.

The most recent earnings conference call, in which the company lowered its revenue outlook for the year, is characteristic of the painful year shareholders have had to endure. Third quarter net income fell 39% to $2.47 million, or 5 cents a share, from $4.03 million, or 8 cents a share, compared to the same year ago period. Though inline with consensus analyst estimates for per-share earnings of 5 cents, eResearch cut its fourth-quarter outlook to 14 cents to 16 cents per share, from a range of 20 cents to 24 cents per share and cut its revenue guidance to between $83.9 million and $86.9 million, from a range of $92 million and $96 million.

Yet, Caris & Co. upgraded the stock to "buy" based on valuation, citing a turnaround that will positively impact earnings beginning in 2007, especially with a new management team taking the reins. The firm sees double-digit stock price over a 12-month time horizon and said bookings will resume growth in 4Q, as year-end budgets tend to cause spike in contract signings, according to Dow Jones Newswires. Those thoughts are being echoed today by Friedman Billings Ramsey analyst James Kumpel, who upgraded eResearch to "outperform" from "market perform."

With tax loss selling nearly over and shares just off of a fresh 52-week low, eResearch might be an investment worth more than a look.

ERES 1-yr chart: