COSTA MESA — FileNet Corp. shares surged 40% Friday amid optimism that new management and products will lead to an earnings recovery.
The stock closed at $22.75, up $6.50 a share, in heavy Nasdaq trading. Earlier in the session, the stock reached a nine-month high of $26, up 60%. Nearly 6.7 million shares changed hands, compared with an average daily volume of about 220,000.
Morgan Stanley analyst William Farrell, in a report issued Friday, said the Costa Mesa-based company has a turnaround plan that will boost sales of its core document imaging products.
The plan, masterminded by new president Lee Roberts, an International Business Machines veteran, includes the introduction of new-generation document imaging products.
Farrell upgraded his rating on the stock to "strong buy" from "neutral." He raised his FileNet earnings estimates to 6 cents a share from 1 cent for the third quarter, and to 70 cents from 22 cents for all of 1998.
FileNet earned 22 cents a share in the 1996 third quarter and posted losses in the first half of 1997 on falling sales when the company had problems integrating two acquisitions.