Markets & Finance

Analyst Actions: RadioShack, Wireless Ronin, 3SBio, Charlotte Russe


Comments from analysts around the Street on Thursday

From Standard & Poor's Equity ResearchFrom Standard & Poor's Equity Research

RADIOSHACK

Goldman Sachs cut its estimates and price target for Radioshack (RSH). The stock fell 5.5% to $21.51 on Oct. 4.

Analyst Matthew Fassler says the shares rallied in the last few days, along with other summer laggards. He believes sales for the electronics retailer are not likely to stabilize on its current product mix, given the ongoing saturation of the wireless category. Fassler thinks the company's videogame entry is its clearest move toward stable sales, but sees impediments to gaming gaining traction. The analyst notes the chain's thin margins on hardware and modest margins on software.

Fassler cut his 4% third-quarter same-store sales growth forecast to a 5% decline, and trimmed his 32 cents EPS estimate for the quarter to 29 cents to reflect more subdued sales evident across the electronics retail group in September. He lowered his full-year EPS estimates from $1.63 to $1.57 for 2007 and, from $1.82 to $1.76 for 2008. He cut his $29 12-month price target to $27, and rates the shares neutral.

WIRELESS RONIN TECHNOLOGIES

Digital-signage outfit Wireless Ronin Technologies (RNIN) cut its 2007 revenue guidance on Oct. 3, prompting ThinkEquity to cut its estimates and price target on the stock. The shares fell 21% to $4.70 on Oct. 4.

Analyst Darren Aftahi believes the largest inherent risks in the Wireless Ronin story -- customer indecision and signage deployment delays -- came to fruition, as the company slashed its revenue guidance for 2007 (to $6-$8 million), even more so than his most-recent note. Aftahi thinks the revenue miss highlights the impact large customers can have given the company's limited customer base. He believes deployment risk is still a thematic topic for Wireless Ronin, and one management should evaluate more seriously if and when it issues 2008 guidance.

The analyst widened his 2007 loss per share estimate from 30 cents to 48 cents, and cut his 2008 estimate from 20 cents EPS to a 7-cent loss. He also lowered his $11 price target to $7, while maintaining a buy rating on the shares.

3SBIO

CIBC World lowered its rating on shares of biotech 3SBio (SSRX) to sector perform from sector outperform. The shares fell 15.6% to $16.88 on Oct. 4.

Analyst Elliot Wilbur based his downgrade on valuation, saying the shares of 3SBio have surged more than 70% over the past two weeks. Although the company's business fundamentals remain intact and its financial outlook is solid, Wilbur believes its premium valuation vs. other-fast growing Chinese ADRs suggests limited room for continued near-term share appreciation. He notes that at yesterday's close, the shares carried a 20% premium to other Chinese life-science names. Wilbur says the valuation still seems "cheap" relative to the company's projected 40%-plus EPS growth in 2007-2010, yet points out that his estimates incorporate a big bet on high-dose Erythropoietin moving smoothly through the regulatory process.

CHARLOTTE RUSSE HOLDING

JP Morgan cut its rating on shares of women's apparel retailer Charlotte Russe (CHIC) to neutral from overweight. The shares fell 11% to $14.19 on Oct. 4.

Analyst Anna Andreeva says she downgraded the stock given last night's downbeat profit outlook from Wet Seal (WTSLA), and suspects the company's business decelerated in September against the backdrop of tough mall traffic and warmer weather. Andreeva says that while the stock has been beaten down (it has fallen about 30% since its third-quarter earnings miss), she sees little catalyst for acceleration in same-store sales and margins in the near-term. The analyst says the stock's valuation continues to look compelling; however, she recommends that investors stay away from "cheap" stocks, especially given tough sentiment around for consumer discretionary stocks.


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