American Capital shares rise as 1Q adjusted results surprise

The stock added $1.43, or 5 percent, to $31.97 in afternoon trading. In the past year, it has ranged from $26.15 to $48.84.

American Capital said it swung to a first-quarter loss after changing the way it accounts for certain assets, using fair market prices rather than internal models. But operating earnings and revenue came in ahead of analyst estimates. The company also is merging its San Francisco office into its Los Angeles and Palo Alto offices, and is opening a Boston office. The move trims 80 employees from its nearly 700-person workforce.

But Jefferies & Co. analyst Daniel Furtado reiterated his 'Underperform' rating on the stock on concerns that its book value could deteriorate further if the credit crisis gripping the markets worsens.

"We remain concerned that further economic weakness could drive additional write-downs should credit deteriorate in-line with our expectations," he wrote in a note to investors.

The company reiterated its forecast for an annual dividend, but issued full-year guidance below Wall Street estimates. I