VISICU, Inc. (EICU)

Visicu announced a blowout quarterly report this afternoon after market close. EICU has fallen like a stone ever since its IPO early this year at $18 level. Revenues up by 68% this quarter, and 78% of YTD. Adjusted operating profit margin improved to 30%, EPS for the quarter 7 cents (vs 2 cents consensus). The company raised its whole year guidance with top line growth of 63%-64% (up from 53% - 56%), and GAAP operating margin from 21% - 23% (up from 16% -18%). Backlog currently at $72.4 million, and management is very confidence with its guidance and future earning visibility.

With the increasing revenues and improved operating margin, I believe the company could earned $0.30 - $0.35 for next fiscal year. The company is still in the very early stage of growth and there's really no other competing systems out there. If the company could maintain its top line growth and continue to improve its margin, even taking into consideration of tomorrow's gap up, it remains reasonable PE level of 33X of its 07 EPS. It is still purchasable at this level. However, there might be some short covering tomorrow morning and I might wait until it stabilizes.

Having said that, this is by no means a cheap stock and could be rather choppy, particularly if it fails to deliver its earnings going forward. Be cautious, flexible and not too greedy!

Position: None, watch list