Time Warner Telecom is still in the red but that didn't stop investors from snapping up shares on Wednesday.

Shares of the telecommunications services company took off in afternoon trading, after the company reported that its second quarter loss narrowed. The stock surged 24.9%, or $4.19, to $21.02.

The company said its quarterly loss shrunk to $9.6 million, or 7 cents a share, versus a loss of $40.4 million, or 34 cents a share for the year ago period. Meanwhile, sales climbed 40.1% to $268 million from $191.3 million. The results were largely in-line with analysts' predictions--the Street expected a loss of 8 cents a share and revenues of $267.7 million.

The solid quarter provided some relief to investors, who were concerned about the integration of its newly acquired unit, Xspedius. So far, so good, according to Morgan Stanley analyst Vance Edelson. In a Wednesday research note Edelson said: "The company appears back on track operationally, demonstrating accelerating enterprise growth and making significant progress integrating Xspedius."

Edelson maintains an "overweight" rating on the stock because of the company's "attractive growth prospects."

Momentum certainly seems to be building in Time Warner Telecom's favor.

The company's enterprise sales grew 5%, up from 4% for the previous quarter. On a year-over-year basis, the unit, which now makes up 68% of the company's total business, grew 57%. In addition, on a continuing operations basis, its data and internet business grew 7% in the quarter and 30% on a year-over-year basis. Meanwhile, margins also improved in the period.

"Margins were right in line at 31%, and better than expected at 32% if adjusted for the branding expense," Edelson said. The margins are expected to return to pre-acquisition levels, a 35 to 36% range, by next year.