) to hold from buy.
Analyst Greg Cappelli says he's downgrading mostly on valuation; he notes the stock is up 79% from Sept. 2001 lows, and he thinks it is largely pricing in a recovered economy and improved labor market.
In light of a difficult February quarter and recent preannouncements by other firms in the industry, Cappelli says he still views a slower than expected economic recovery as being the primary risk to the company's story near term; longer-term, he thinks the company's prospects remain strong.
He does not view the Ernst & Young deal as a major event for Resources Connection financially. Cappelli sees $0.62 fiscal 2002 EPS, and $0.80 for fiscal 2003.