NEW YORK – Martha Stewart Living Omnimedia Inc. (MSO) Wednesday said it expects second quarter earnings to meet analyst estimates, and the company's stock rose after Martha Stewart denied wrongdoing in an insider trading scandal.
Analysts said shares of Martha Stewart were up due to waning investors fears about the scandal and the magnitude of its possible effect on the company.
"Some of the panic is over in terms of the fate of the company, because there's been a lot of commentary saying, 'We don't think (the scandal) will kill the brand,"' said Laura Richardson, an analyst at Adams, Harkness & Hill.
Shares of Martha Stewart rose $1.65, or 11.5 percent, to $16.05 in afternoon trading on the New York Stock Exchange Wednesday.
The New York-based company said it expects earnings per share in the second quarter of 15 cents on revenue growth of about 15 percent, with ad pages at its flagship magazine up 12 percent in the quarter.
According to Thomson First Call, the average estimate by Wall Street analysts for the company's earnings per share in the second quarter was 15 cents.
Stewart, the home decorating diva, has been under intense scrutiny because she sold 3,928 shares of biotechnology company ImClone Systems Inc. just one day before federal regulators rejected the drugmaker's cancer treatment.
Former ImClone CEO Sam Waksal, who has been romantically linked with Stewart, was arrested on June 12 and charged with conspiracy, securities fraud, and perjury involving an alleged insider trading scheme in ImClone shares.
Late on Tuesday, Stewart reiterated earlier claims that inside information played no role in her sale of shares in ImClone Systems, but said she had talked with federal regulators about the trade.
After Stewart's trade was revealed, her company's stock had dropped nearly 29 percent, falling as low as $13.50 from its June 6 close of $19.01.