KeyBanc Cuts Price Target on WMS Industries (WMS), Company Releases Poor Results & Weak Guidance

KeyBanc is reiterating its Buy rating on shares of WMS Industries (NYSE: WMS), but is lowering its price target from %51 to $46 due to the company's weak guidance and future outlook.

The company pre-announced its Q3 results with a total revenue of $192 million and an EPS of $0.40-$0.42. As a result the firm is lowering its Q3, Q4, and FY11 EPS estimates from $0.52, $0.66, and $2.00 to $0.42, $0.58, and $1.82.

The firm notes that investors should take advantage of the current weakness in the stock and buy.

For 2012 the company is predicting that revenue will increase 3-7% Y/Y to $810-$850 million with operating margin increasing to 21-22%.

Buyback. WMS repurchased $30 million of stock or over 750,000 shares during 3Q11, bringing FY11 total repurchases to $80 million or 2.1 million shares. With over $220 million in available dry powder under its current stock repurchase authorization.

KeyBanc comments that, "while this guidance is disappointing, we believe it could be conservative as management is working to ratchet down investor expectations in the face of an uncertain operating environment and does not want to go through this exercise again in the near future."

For more ratings news on WMS Industries click here and for the rating history of WMS Industries click here.

Shares of WMS Industries closed at $36.22 yesterday.

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