The global publishing comany posted lower than expected $1.85 vs. $1.69 earnings per share for the second quarter. Analyst Steven Barlow says the earnings per share missed his $1.95 estimate, and the $1.91 consensus. He notes lowers sales in book clubs and a lackluster economy contributed to the weakness.
Barlow says Harry Potter trade sales, which have higher margins, are not as robust as the company had hoped. Therefore, he lowered his $2.80 fiscal 2003 (May) earnings per share estimate to $2.70. He sees $3.10 fiscal 2004 earnings per share. Barlow maintains his buy rating, however, as the timing of the release of Harry Potter book five doesn't affect his estimates so long it releases within 2003, which looks likely. He remains cautions against an overreaction to the lowered guidance, and is keeping his $51 target.