Web.com (NSDQ: WEB) has made a big gain over the past month, following a successful Investor Day presentation.

In our December issue, Jim Pearce named the company has one of our top picks for 2016 as it refocuses on the higher end of the web development and hosting market. It’s also working on untangling its financial statements, which have been nearly impossible to decipher, and boosting revenue growth.

Shares dropped more than 15% on Nov. 3, when the company reported weaker-than-expected revenue growth. The company had said that it expected quarterly sales between $193 million and $195 million, but came up just shy at $192.8 million. Both operating and net income came up short on a year-over-year basis after Web.com had to take a sizable $1.9 million adjustment to bring accounting practices at a recent acquisition in line with its own. Needless to say, its investors weren’t thrilled.

Despite that stumble, management said during the recent Investor Day that it remains on track to hit between $766 million and $769 million in revenue this year and meet its earnings target.

It also announced that it was acquiring Argentina-based DonWeb.com and that it has a strong presence in Latin America. DonWeb has been turning in strong growth in the region, where many businesses are only beginning to appreciate the value of a strong web presence. While almost any business here in the U.S. has a website, they’re only just beginning to be a “must-have” for businesses in Latin America.

Management was positive about the boost from the acquisition on 2017 revenue, which is expected to close in the next few months. That said, while adjusted earnings are forecast to come in at about $177 million this year, management expects them to fall between $187 million and $192 million next year thanks to acquisition-related growth.

Free cash flow is also expected to jump by more than 30% in 2017, rising from an expected $100 million in 2016 to between $133 million and $140 million. While the company didn’t release any specifics about how that extra cash would be spent, it pointed out that it has historically used those gains to repay debt and fund stock buybacks. Future acquisitions were also brought up, but no targets were named.

After a rather lackluster third quarter, that Investor Day was exactly what shareholders needed. While the stock was up more than 6% over the past week, it’s up by almost 23% since the event on December 13. Its shareholders – and us – clearly think its growth plan is feasible. If it follows through with its plan to simplify its financial reporting, that should give its shares another boost once analysts can “follow the money.”

Buy Web.com up to $24.

– Benjamin Shepherd

Cerus Progress Slow

I am lowering the top of the buy range on Cerus Corp. (NSDQ: CERS) to $7. Cerus makes the Intercept system, cleans up blood supplies of pathogens. Although I think that Cerus is on the right track, and that the payoff should be worth the wait, the pace of progress remains slow.  The current delay is due to some chemistry and manufacturing glitches in Europe that are slowing progress toward submission of Intercept for European approval for use in red blood cells (RBCs).  Cerus is expected to make a detailed progress report in March along with the quarterly earnings report.  On the bright side, CERS has already reported positive results on pathogen neutralization in a pivotal Phase III 2015 clinical trial on RBCs in Europe.

I recommended the stock in November of 2015 and the company has definitely progressed since then, advancing through some key clinical trials toward its big goal, which is the use of Intercept to neutralize viruses such as Hepatitis C and HIV in RBCs that will be used for transfusions.  To be clear:  FDA approval for use in RBCs remains more likely than not, but is not certain.

Still there are some hopeful developments given the fact that CERS has received an important tranche of a U.S. government grant of nearly $11 million in order to fund further studies.  The government’s total grant to CERS is nearly $185 million, which is to be put toward research and manufacturing facilities once the FDA approves the Intercept system for use in RBCs in the U.S.  CERS has already tapped $31 million of the overall grant to fund a study of Intercept’s ability to neutralize the Zika virus in Puerto Rico.  The company has also received a special application from the FDA for Zika and reported some $81 million in cash and short term investments on its balance sheet at the end of September 2016.

The key to intermediate term success lies with the conclusion of its SPARC trial in Europe and on the resolution of the glitches I mentioned above. If and when CERS receives approval for RBC use in Europe, it should take a few quarters to see revenues ramp up; the market for RBC transfusions in the world is 80 million per year.  FDA approval would give CERS a huge potential earnings stream and could make Intercept a billion dollar per year revenue generator once it is widely used. The company has already begun to sell Intercept throughout the world, for use on platelets and plasma, and most importantly in the U.S. through its partnership with the Red Cross and other key regional blood banks.

Buy Cerus Corp. up to $7.

I have a position in CERS.

– Joe Duarte