Markets & Finance

Gerard Klauer Cuts Circuit City to Neutral


Gerard Klauer downgraded Circuit City Group (CC) to neutral from buy. The electronics retailer warned Friday that its January and February sales were below estimates. The company sees EPS of $0.70-$0.74 in the fourth quarter and $0.89-$0.93 in fiscal year 2002.

Analyst Scot Ciccarelli says that while fourth quarter EPS is still expected to be $0.68-$0.71, comp store sales will fall slightly below expectations. He notes it now looks as if fiscal year 2003 (ending February) EPS will be heavily impacted by remodeling costs. He says $130 million in remodeling and relocation expenditures will reduce fiscal year 2003 EPS by about $0.18, so he sees $0.57-$0.67 total EPS, well below his $0.85 estimate (excluding KMX). He believes the stock will come under severe selling pressure today on the news.


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