Martek Biosciences Shares Jump on Better-Than-Expected 2nd-Quarter Profit

NEW YORK -- Martek Biosciences Corp. shares surged in premarket trading Wednesday after the company reported a better-than-expected second-quarter profit, and despite an unabashedly bearish note from an analyst.

Late Tuesday, the company, which makes nutritional oils used in supplements and infant formula, said it earned $6.3 million during its second quarter, or 19 cents per share, ahead of Wall Street's expectations for 16 cents per share.

Investors liked the news, sending shares of Martek up $2.51, or 10 percent, to $27.72 on the INET electronic exchange, from Tuesday's closing price of $25.21 on the Nasdaq.

At least one analyst wasn't quite as impressed. Merrill Lynch analyst David Munno, who has a sell rating on the stock, said the company's long-term revenue growth is uncertain, as a couple competitive products may be in the pipeline which could lead to pricing pressure.

"We expect two to three additional food deals in 2006, but the revenue potential may still be small," Munno wrote in a note. "We believe the Street is overestimating the revenue potential and the launch curve of food products and would sell on any strength related to food deals."