Analyst Paul Coster says there are inconsistencies. June sales improved after weak April through May, yet the company cut its second half outlook. Sales coverage must increase, yet weak demand caused a second-quarter shortfall. Cost of goods sold will fall, yet there's no impact on "selling, making, and services".
He cuts his 43 cents 2005 earnings per share estimate to 30 cents and 69 cents 2006 earnings per share to 51 cents.
Though hesitant, Coster keeps an overweight rating because the stock trades at 20.5 times new its 2006 estimate, near the low-end of its two-year range of 20 times to 36 times over the next 12 months earnings per share. In addition, he thinks the restructure program should yield 2006 earnings per share growth of over 70%.