Markets & Finance

Analyst Actions: Thornburg Mortgage, Zumiez, Coldwater Creek


From Standard & Poor's Equity ResearchBEAR STEARNS DOWNGRADES THORNBURG MORTGAGE

Bear Stearns analyst David Hochstim says Thornburg Mortgage (TMA) failed to meet $28 million margin call and defaults on $320 million secured loan. He says doesn't know precisely how much in borrowing TMA has with other lenders now, but at Dec. 31, 2007, the company had $9.2 billion of reverse repo agreements maturing during the first three months of 2008, with $7.9 billion due in January and $1.3 billion in February and March.

Hochstim says he doesn't have enough information to confidently estimate extent of asset sales and losses that are likely to be generated, but it's likely the company's portfolio will be smaller at Mar. 31, 2008 than at Dec. 31, 2007.

He asumes the company's holdings fall by $5 billion in the first quarter with a loss of $500 million; sees $2.62 first quarter loss, assumes no profit for remainder of year. He downgrades the stock to underperform.

PIPER JAFFRAY CUTS ZUMIEZ TO NEUTRAL FROM BUY

Piper Jaffray analyst Jeffrey Klinefelter says Zumiez (ZUMZ) faces the most difficult comps among his teen retail group, after posting roughly 11% gain in the first half of fiscal year 2008. He notes with moderation in spending growth on relatively small total sales base, the company faces de-levering, gross margin compression on fixed occupancy expenses.

Klinefelter says on an annualized basis, Zumiez leverages expenses at +3% to +4% comp range and while initiatives are in place in response to top-line moderation, he does not believe Zumiez will be able to sustain its operating margin rates from last year.

He trims $1.03 fiscal year 2009 (January) EPS estimate to $0.95, reflecting 20 basis points of operating margin deterioration vs. prior year. He cuts 21 price target to 17.

ROTH CAPITAL DOWNGRADES COLDWATER CREEK TO HOLD FROM BUY

Roth Capital analyst Elizabeth Pierce says Coldwater Creek's (CWTR) fourth quarter loss per share of $0.19 is in line with her estimate. She believes the company still faces major headwinds from the general macroeconomic environment and from ongoing merchandise issues. Even though she expects merchandise issues to gradually improve, she cannot say the same thing about the current spending climate.

Pierce notes Coldwater Creek's slightly lowered new store openings plan seems to be another issue that will continue to haunt the stock as the Street continues to demand that companiess take very conservative, measured approach to growth during these challenging times.

She cuts $0.18 fiscal year 2009 (January) EPS estimate to $0.15 loss per share. She cuts her 5.74 price target to 5.


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