First Albany downgraded United Online (UNTD) to neutral from buy.
Analyst Jason Avilio says he downgraded the Internet-access services provider due to its 19,000 net-access subscription additions, which is below his and the Street-low 75,000 estimate, and is largely a result of competitive factors. He notes revenue is below his estimate, and says better-than-expected earnings per share stemmed from falling telco costs and seasonally weak usage.
Avilo says United Online is undervalued, but he doesn't see any catalysts to move the stock up, especially in the seasonally weakest quarter of the year. He advises investors to stay on the sidelines pending better visibility into the company's ability to acquire and grow net subscribers. He cut the $25 target to $13, cut the 94 cents 2004 earnings per share estimate to 92 cents, and trimmed the $1.16 2005 estimate to $1.02.