Stocks started the week on a down note, with major market indexes pulling back modestly as another corporate earnings season begins to gain traction. The Dow Jones Industrial Average fell 0.1%, while the S&P 500 endured a similar decline.
But some companies bucked the negative trend. Weight Watchers (NASDAQ: WTW) soared following an encouraging analyst note, Gogo (NASDAQ: GOGO) popped on good earnings news, and Electronics For Imaging (NASDAQ: EFII) rose after finding a buyer.
Weight Watchers bounces back
Shares of Weight Watchers jumped as much as 13.4% early in the session, then settled to close up 5.4% after Morgan Stanley analyst Vincent Sinisi predicted the company ended the first quarter with around 4.5 million subscribers.
To be fair, that's roughly in line with Weight Watchers management's latest guidance for a slight sequential subscriber decline (from 4.6 million last quarter). But today's pop makes sense considering the stock had plunged more than 40% since late February, including a more-than-11% drop last week after another analyst warned of a potentially steep decline in subscribers to start the year.
Sinisi reiterated his own equal weight rating on Weight Watchers shares, but suggested investors could enjoy significant upside if subscriber trends hold steady when it releases first-quarter results next month.
Gogo flies on preliminary results
Shares of Gogo soared 8.1% after the in-flight connectivity specialist released encouraging preliminary first-quarter results.
Gogo won't release final results until May 9, 2019. But this morning, the company told investors to expect revenue of $197 million to $200 million, down from $232 million in the year-ago period and slightly below the $202 million most analysts were anticipating. But that should translate into a consolidated net loss of $17 million to $20 million (narrowed from a $27.4 million loss a year earlier), and better-than-expected adjusted EBITDA of $35 million to $38 million.
CEO Oakleigh Thorne attributed the company's profitability improvements to a combination of lower-than-expected satcom and operating expenses, and higher-than-expected revenue from its commercial aviation segment.
"Our focus on cost management and operational execution continues to drive financial momentum," Thorne added.
Electronics For Imaging is being acquired
Finally, Electronics For Imaging stock skyrocketed 29.3% after the digital-printing technologist agreed to be acquired by an affiliate of Siris Capital Group in a deal worth roughly $1.7 billion. The private equity firm's affiliate will buy all outstanding shares of EFII common stock for $37 per share in cash, good for a 25.9% premium from Friday's close.
That said -- and this explains why shares closed above the agreed acquisition price -- the company is allowed to solicit alternative acquisition proposals for a "go-shop" period of 45 calendar days, and can terminate the Siris agreement should it find a more attractive offer.
Nonetheless, Electronics For Imaging's board has unanimously recommended shareholders adopt the Siris agreement should the go-shop period conclude without an alternative deal. If that happens, Electronics For Imaging will then become a wholly owned private subsidiary of the Siris affiliate.
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