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Raymond James Slashes Estimates On RadioShack, Says Becoming 'Increasingly Concerned'

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In a research note released Wednesday, Raymond James analyst Dan Wewer said he is becoming "increasingly concerned" on RadioShack (NYSE: RSH).

Wewer noted the deterioration of the mobility market which represents nearly 50 percent of its business. This same reason has also caused traffic to decline in the stores.

The analyst said even though RadioShack's management is trying to overcome its deteriorating market share loss, this is increasingly worsening its economic condition and gross margins.

The company's operating loss is continuing to widen and is currently at $0.98, while it was $0.26 the same time a year ago. This has also led Wewer to believe that RadioShack may not be the best opportunity.

Although the company has enough cash on hand and enough access, RadioShack has posted losses for two years now, Wewer noted. He believes the company is likely to post another loss. Although this may not be a problem in the near-term, it is a problem in the long-term. The company currently has $62 million in cash and $362 million of availability under its credit facility.

Wewer decreased his EPS outlook for FY14 from a loss of $1.83 to a staggering loss of $4.05 per share. This new estimate reflects the company's ability to improve gross margins, sustain gross comps, and its earnings results. Additionally, the analyst is changing estimates for FY15 EPS to a loss of $3.66.

The Raymond James analyst maintains a Hold rating on shares of RadioShack.

Shares of RadioShack closed down more than seven percent on Wednesday.

Posted-In: Analyst Color News Analyst Ratings

 

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