June 27, 2006
fundamental outlook remains difficult, but upside is large if a solid (although not heroic) turnaround occurs,wrote Credit Suisse analyst Edward Kelly in a May 4 report rating the stock outperform. (Credit Suisse acts as a market maker in Rite Aid and RadioShack securities.)
Given the company's well-developed merchandising skills, this laggard performance remains a bit of a mystery,writes Goldman Sachs analyst John Heinbockel in a May 4 report. Nevertheless, Heinbockel rates the stock a buy. (Goldman owns 1% or more of Rite Aid common equity, expects or intends to seek compensation for investment banking services from Rite Aid, and had an investment banking relationship with Rite Aid in the past 12 months.)
Their growth has been pretty savvy,says George Whalin, president and CEO of San Marcos (Calif.)-based Retail Management Consultants.
With major competitors also focusing on expanding their asset bases, and competition increasing from other formats, we remain concerned that [Rite Aid's] high debt levels may limit its longer-term growth prospects,wrote Standard & Poor's analyst Joseph Agnese in January. He has a hold recommendation on the stock. Still, Rite Aid has slashed its debt to about $3 billion from $6 billion in 1999, when the company brought in new management.
We clearly have a lot more work to do to get this company back to levels of profitability and growth that we all expect,said Claire Bobrowski, president and acting CEO of RadioShack, in an Apr. 21 conference call. (A company spokesperson declined to comment on financial performance before second-quarter earnings are announced on July 21.)
The recent turmoil in company leadership&ellip;has, as we expect, introduced an element of turmoil throughout the organization,wrote Raymond James analyst Budd Bugatch in an Apr. 24 report reaffirming a market perform rating. (Raymond James expects to receive or intends to seek compensation for investment banking services from RadioShack.)
remains challenging,Deutsche Bank analyst Mike Baker noted in a May 15 dispatch,
with the main issue being a slow ramp in Cingular trends in areas where the company does not have a large market share.
bad signal.He rates the stock a hold. (Deutsche Bank makes a market in RadioShack securities, owns 1% or more of the company's common equity securities, and expects to receive or intends to seek compensation for investment banking services from RadioShack.)
one of the bigger issues long-term,writes Credit Suisse analyst Gary Balter, who has a neutral rating on the stock. Mall traffic -- which skews toward teenagers, mothers, and senior citizens -- isn't necessarily ideal for RadioShack's product mix, analysts say.
That's fine to talk about, but to actually implement it, and implement it from mall-based locations?says Michael Tesler, president of Norwell (Mass.) retail consulting firm RetailConcepts.com.
I wish them luck.
We believe results could be so far below current consensus that EPS estimate revisions could be tough on share performance in the near term,Stifel Nicolaus' Schick wrote on June 7. (Stifel Nicolaus expects to receive or intends to seek compensation for investment banking services from RadioShack.)