Out of the Gate: Starent surges following higher 1Q results

NEW YORK—Shares of Starent Networks Corp. opened sharply higher on Wednesday after the maker of equipment for wireless networks said its first-quarter profit more than quadrupled, surpassing Wall Street estimates.

Starent shares gained $2.22, or 15.9 percent, to $16.20 in morning trading. The stock has ranged from $10 to $31.67 over the past year.

Late Tuesday, Starent reported its first-quarter earnings more than quadrupled to 13 cents per share. Analysts polled by Thomson Financial had expected earnings of 5 cents per share.

Starent also predicted its revenue would grow between 56 percent and 60 percent in 2008. The company said it previously estimated revenue to grow about 50 percent in the year.

In a note to investors, Goldman Sachs analyst Thomas D. Lee raised his share price target to $17 from $14, implying he expects the shares to grow up to 22 percent from their Tuesday close of $13.98.

Lee said Starent would continue to benefit from growth in the wireless data market, and said its 2008 estimates may be "conservative."

Separately, PiperJaffray analyst T. Michael Walkley raised his price target to $23 from $21, saying Starent maintains advantages against its competitors such as Cisco Systems Inc. He reiterated his "Buy" rating and raised his 2008 earnings outlook to 74 cents per share from 61 cents per share.

"We believe Starent deserves to trade at a premium due to its dominant market position, strong product portfolio and solid macro trends," he said.