Markets & Finance

Analyst Picks and Pans: Barnes Group, Sina


Barnes Group (B)

Jefferies & Co cuts estimates

Jefferies & Co analyst Yvonne M. Varano cut her 2009 earnings estimates Wednesday for Barnes Group Inc., a day after the aerospace and industrial-components manufacturer withdrew its guidance for the year because of the recession and uncertainty in transportation markets. She cut her estimate to 80 cents per share from $1.24 per share.

Analysts surveyed by Thomson Reuters expect Barnes Group to earn $1.19 per share this year.

Varano said the largest factor in Barnes' decision to withdraw its guidance is uncertainty surrounding the automotive market due to bankruptcy protection filings by General Motors Corp. and Chrysler LLC.

"We believe that anticipated summer plant closures could now be longer than originally anticipated," she said in a note to investors. "The lack of clarity in regard to production schedules is likely to negatively impact demand."

The result will likely be weaker than expected revenue in the second and third quarters, Varano said.

Barnes said in May it expected to make $1.20 to $1.35 per share for the year. It did update its estimate as it announced Tuesday its withdrawal of the guidance.

Barnes said problems in transportation sectors like the automotive industry, which make up a third of company revenues, have made it difficult to predict how the company will fare the rest of the year.

Monday, analyst Matt J. Summerville of KeyBanc Capital Markets cut his 2009 estimate for Barnes to $1.12 per share from $1.20 per share. He reiterated his estimate Wednesday and maintained a "Hold" rating.

Barnes Group's guidance in May may not have contemplated the bankruptcy protection sought by the two automakers "and it is likely difficult to ascertain what potential impact these filings will have on suppliers in the form of manufacturing facility closures and/or extended shutdowns," Summerville said in a note to investors Wednesday.

Brian Koppy, director of investor relations at Barnes Group, said Monday that the impact of the bankruptcies was still being assessed by Barnes and its customers.

Varano said Barnes also is being hurt by weakness in European markets, particularly transportation-related products. In addition, aerospace manufacturing and parts maintenance and repairs have weakened, although she believes the aerospace business at Barnes has done better compared with the weak industrial and automotive markets.

Sina Corp. (SINA)

Pali downgrades to neutral from buy

Pali analyst Tian Hou says Sina's first quarter was mixed and the company gave a somewhat weak second quarter guidance. Hou added that managememt's tone regarding the second half of 2009 was very conservative mainly due to hard comparables last year due to the Olympics, which was different than what she expected.

She says the reason for slower growth is a decline in event-driven advertising budgets in 2009, which significantly differs from 2008, as advertisers are more cautious in spending this year and have no incentive to spend since there are no significant events on horizon.

Hou cut her $1.44 2009 EPS estimate to $1.30 and $2.29 for 2010 to $1.85.


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