Shares of Arctic Cat Inc. skidded to new 52-week lows for three trading days in a row, the latest slide triggered by less than optimistic comments from analysts.
But sales have been steadily slipping, and even with planned production cuts, analysts have said that is not enough to prop up the stock price.
Analyst Edward Aaron of RBC Capital Markets says the third-quarter forecast that Arctic Cat revised Friday offers a grim outlook for 2008.
Even if sales improve this year and cost-cutting measures help the bottom line, Aaron wrote in a note to investors that he does not anticipate a significant earnings turnaround anytime soon.
He dropped his 2008 earnings prediction to 7 cents per share from 73 cents per share and reduced his 2009 forecast to 27 cents per share from 83 cents per share. He also cut his price target to $9 from $15 and maintained an "Underperform" rating.
The market reaction was brutal, sending shares to $8.12 in after-hours trading Tuesday. Shares closed after regular trading at $8.99 Monday and $9.21 Friday, a hefty shrug from closing at $12.31 Thursday, before the revised forecast. Shares of Thief River Falls, Minn.-based Arctic Cat, which trades under the symbol ACAT, had traded as high as $20.77 over the last year. Shares traded heavily for the three days following the revision, with most of the action Friday after the announcement.
Aaron wasn?t the only analyst with a dim view.
"While the industry as a whole is tackling unfavorable macroeconomic trends, the company has yet to manifest significant market share expansion and will be focusing efforts in the near term on aligning inventory and production appropriately with consumer demand," KeyBanc Capital Markets analyst Scott Hamann wrote in an investor note.
Hamann cut his 2008 profit estimate to 2 cents per share from 85 cents per share and lowered his 2009 prediction to 30 cents per share from 97 cents per share. He also cut his third-quarter forecast to a loss of 60 cents per share from a loss of 33 cents per share and reaffirmed a "Hold" rating.
— from staff and wire reports