Trend Micro Surges on Strong Earnings and Analyst Upgrade (TMIC)

Apr.26.06 | About: Trend Micro (TMICY)

Trend Micro (TMIC) reported solid quarterly earnings on Tuesday after the Tokyo Stock Exchange closed. Trend recorded a 1st quarter (Jan-Mar 2006) y-o-y increase in Net sales of 19% and despite a 52.7% increase in COGS, had a 14.3% increase in Operating income, 15.1% increase in Net income before taxes, and 8.7% increase in Net income. Growth was steady in all of Trend's major markets but was particularly strong in North America at +39% revenue and Asia at +24% revenue. For the current quarter ending in June, Trend is forecasting a 16% y-o-y increase in revenue and 10% increase in operating profit.

The positive earnings results and forecast led to heavy buying of Trend's ordinary shares (Tokyo: 4704) sending them 4.10% higher to 4,320 yen. This also prompted an upgrade by Deutsche Bank Securities Japan from "sell" to "neutral" with a new price target of 4,200 yen (previously 3,300 yen). The DB analyst cited the fact that Trend began expensing its stock options, which had kept downward pressure on its share price and concerns of softer sales in Europe were alleviated after a 12% y-o-y gain, beating its expectations. Trend's ADRs are up 6.95% intra-day at $37.54.

TMIC 1-yr chart: