B. Riley Slashes Target on RadioShack (RSH) to $0; Sees Odds of Bankruptcy at Over 50%
- Top 10 News for 3/2 - 3/6: Dow Index Adds Apple; Nonfarm Numbers Rip in Feb.; Banks Ace Stress Test
- Apple (AAPL) Will Replace AT&T (T) in the Dow Jones Industrial Average
- Change in Nonfarm Payrolls 295K vs 235K Expected
- Fed Stress Test Shows all 31 Banks Exceed Minimum Requirements (JPM) (GS) (MS) (WFC) (BAC)
- Staples (SPLS) Tops Q4 EPS by 1c; Comps Fell 1%
B. Riley is taking its price target on RadioShack (NYSE: RSH) from $1 down to zero while maintaining a Sell rating following recent quarterly results.
Analyst Scott Tilghman noted that Q1 comps fell 14 percent, versus his expectation of a 12 percent drop and the Street at negative 9 percent.
The company blamed the broader CE market yet its comps were far worse than those of Best Buy for the comparable period suggesting market share is being ceded and traffic driving challenges persist. We expect sales declines to persist and think it will be nearly impossible for the company to drive traffic successfully without significant advertising expenditures or discounting at the expense of gross margin, the analyst noted.
Gross margin fell 370 basis points to 36.6 percent amid favorable inventory adjustments. While Tilghman sees that flattening, lagging sales will limit leverage opportunities.
Tilghman expands his FY14 loss per share from $2.60 out to $2.67.
Based on recent and expected cash burn, working capital and debt are likely to be at best, offsets to one another. We think a turnaround is nearly impossible for the company at this point, and think liquidation value is minimal,Tilghman said. He sees the odds of bankruptcy at over 50 percent for RadioShack.
RadioShack Corp. closed at $1.38 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Skullcandy (SKUL) PT Raised to $14 at Jefferies on Strong Revenue
- Ciena (CIEN) Bullish View Maintained at Needham & Company Post Q1
- Costco Wholesale (COST) PT, Estimates Raised at Argus
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change, Hot Comments, Rumors, Trader Talk
Related EntitiesB. Riley, Bankruptcy
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!