) to neutral from buy.
The maker of textbook publisher sees breakeven third quarter earnings per share, which Analyst Lauren Fine says compares to her estimate and the Street's consensus 31 cents estimate. Fine notes the company's new $1.85-$2.15 fiscal 2003 (May) guidance is down from its previously lowered guidance of $2.50. She says the company cited lower-than-expected January revenue within the Trade & School Book Clubs business, and concerns that tight state budgets and a war could impact the fourth quarter.
Fine cut her $2.50 fiscal 2003 earnings per share estimate to $1.88, and cut the $2.95 fiscal 2004 estimate to $2.32. She notes the stock traded to $26 after the close of trading Monday, when Scholastic first reported its guidance. She thinks this valuation makes sense given disappointing growth prospects for this year, and the fact that the company has now negatively surprised twice in one year.