Analyst downgrades 3-13-07: RadioShack & Marvell Technology downgraded today
Posted Mar 13th 2007 11:24AM by Kevin Shult
Filed under: Before the bell, Analyst upgrades and downgrades, Bad news, Dollar General (DG), RadioShack Corp (RSH), Marvell Technology Group (MRVL)
MOST NOTEWORTHY: Some of today's more notable downgrades include Accredited Home Lenders Holding Co (LEND), RadioShack Corp (RSH) and Shuffle Master, Inc (SHFL):
- Keefe Bruyette cut Accredited Home Lenders Holding Co (NASDAQ: LEND) to Underperform from Market Perform, saying the downturn in the subprime market raised liquidity concerns on the stock.
- RBC downgraded RadioShack Corp (NYSE: RSH) to Underperform from Sector Perform, explaining that cost cutting measures are largely complete and margin expansion estimates are too aggressive.
- Shuffle Master Inc (NASDAQ: SHFL) was downgraded to Hold from Buy at Jefferies, citing the lack of visibility into the company's placements and potential IP protection risk in Macau. Shuffle Master was also cut to Underperform from Peer Perform at Bear Stearns following the company's announcement that it will have to restate prior financial results.
OTHER DOWNGRADES:
- UBS downgraded shares of Marvell Technology Group (NASDAQ: MRVL) to Reduce from Buy, citing risks to HDD demand given upcoming launches by Apple (NASDAQ: AAPL) of NAND-based Video iPods. The analyst expects HDD weakness to phase in and not collapse, but sees limited growth in the HDD segment.
- Roth Capital cut WPT Enterprises, Inc (NASDAQ: WPTE) to Sell from Hold, citing valuation, reduced earnings expectations and execution risk related to bringing the online gaming business in house.
- China Eastern Airlines Corp (NYSE: CEA) was downgraded to Underweight from Equal Weight at Morgan Stanley.
- China GrenTech Corp (NASDAQ: GRRF) was downgraded to Neutral from Positive at Susquehanna.
- RBC cut Nova Chemicals Corp (NYSE: NCX) to Sector Perform from Outperform.
- Sandler downgraded shares of OceanFirst Financial (NASDAQ: OCFC) to Hold from Buy.
- Citigroup downgraded Dollar General Corp (NYSE: DG) to Hold from Buy.
Analyst summaries provided by TheFlyOnTheWall.com (subscription required). Tags: analyst, cea, china eastern air, china grentech, ChinaEasternAir, ChinaGrentech, dg, dollar gen, DollarGen, downgrade, epte, grrf, home lenders, HomeLenders, lend, marvell, mrvl, ncx, nova chem, NovaChem, oceanfirst, ocfc, radioshack, ratings, rsh, shfl, shuffle master, ShuffleMaster, theflyonthewall.com, WPT ent, WptEnt
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Reader Comments (Page 1 of 1)
3-14-2007 @ 8:10AM
Andrew Horowitz said...
Shuffle Master is a name that you should really look at as a play on the gaming market domestically and internationally, The reality is that it is a "picks and shovels" approach to the gaming industry.
They are a great benefit to the casinos as they are in the business of moving the odds towards the house with their games and particularity their shuffle machines. It has been shown that the automatic/continuous shuffle machines can bring the odds almost 1% better towards the house. That is big.
Between the royalties on the games such as specialty poker and blackjack, along with sales and service on the continuous shuffle machines, we have a good outlook as the gaming industry expands.
The recent downturn is vastly overdone and the general market jitters have not helped the fact that the recent delays and the lack of information from SHFL is problematic but it is not as bad as many of the sellers are predicting.
It seems that management has drifted a touch, but at these prices ($17+ as of this post).
According to a recent news release: "The maker of automatic card-shuffling and casino chip sorters said it uncovered an accounting error related to profit recorded on inventory purchased from subsidiary Casinos Austria Research & Development GmbH & Co.
The error resulted in a $1.2 million overstatement of net income for 2006, and the company said it will restate its fourth-quarter and full-year 2006 results. "
The overstatement and the error was self reported and that is a good sign that there seems to be a desire to clean up the act by the management. We would consider averaging down this position if held and adding as a new position at prices under $19.
As of this post, Horowitz & Company clients own shares of this stock.
Andrew Horowitz, CFP
See more details on this at:
http://www.thedisciplinedinvestor.com/blog