UBS Maintains a 'Neutral' on RadioShack (RSH); Quick Thoughts on RSH’s Pre-announcement
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Price: $0.24 --0%
Rating Summary:
0 Buy, 9 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 12 | New: 7
Rating Summary:
0 Buy, 9 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 12 | New: 7
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UBS maintains a 'Neutral' on RadioShack Corp. (NYSE: RSH) price target lowered from $10 to $8.
UBS analyst says, "RSH preannounced 4Q comp of 2% and EPS of $0.11-$0.13 (v. $0.37 consensus, UBS $0.42)...Three factors are weighing on RSH and all appear to be permanent: RSH’s gross margin is under pressure from: 1) the mix shift to the iPhone, 2) the contribution from Target (NYSE: TGT) sales, and 3) an intensely promotional environment. These factors are likely to be the norm, which will permanently put RSH’s gross margin rate in the high 30% range (vs. the mid 40% range historically). Given its already lean cost structure, RSH has little room to tighten its cost structure to preserve its overall margin rate. This adds great uncertainty to its long-term profit outlook."
UBS analyst also notes that for now, RSH has sufficient liquidity ($590 mln), however the company did suspend it's stock buyback plan. This potentially means that RSH's dividend, which costs $50 mln annually, is safe near-term, but questionable long-term.
For an analyst ratings summary and ratings history on RadioShack Corp. click here. For more ratings news on RadioShack Corp. click here.
Shares of RadioShack Corp. closed at $10.23 yesterday.
UBS analyst says, "RSH preannounced 4Q comp of 2% and EPS of $0.11-$0.13 (v. $0.37 consensus, UBS $0.42)...Three factors are weighing on RSH and all appear to be permanent: RSH’s gross margin is under pressure from: 1) the mix shift to the iPhone, 2) the contribution from Target (NYSE: TGT) sales, and 3) an intensely promotional environment. These factors are likely to be the norm, which will permanently put RSH’s gross margin rate in the high 30% range (vs. the mid 40% range historically). Given its already lean cost structure, RSH has little room to tighten its cost structure to preserve its overall margin rate. This adds great uncertainty to its long-term profit outlook."
UBS analyst also notes that for now, RSH has sufficient liquidity ($590 mln), however the company did suspend it's stock buyback plan. This potentially means that RSH's dividend, which costs $50 mln annually, is safe near-term, but questionable long-term.
For an analyst ratings summary and ratings history on RadioShack Corp. click here. For more ratings news on RadioShack Corp. click here.
Shares of RadioShack Corp. closed at $10.23 yesterday.
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