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Non-Tech : Pep Boys (PBY) Automotive Parts and Accessories
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To: John L. who wrote (8)4/15/1997 8:50:00 PM
From: David B. Higgs   of 116
 
This is a few weeks old but may be helpful in understanding the poor stock performance since a few days prior to the last quarterly earnings report. After the release of such positive earnings and announcement of expansion plans, share price continued to drop.

I contacted Investor Relations and learned that the day before earnings were released, Bear Stearns downgraded PBY from a buy to hold. At the same time they issued a 70 page report on the "after care auto parts market". In this report, they project that the after market is moving from a self service market (Joe Blow changing his oil on Saturday afternoon) to a full service market (Joe Blow drives his car to Jiffy Lube for an oil change).

My guess is that Pep Boys will be bargained priced in the very low 30's until next quarter's reporting or some other form of positive news is released. There is news out there that for some reason has not been reported. For example, the LA Times reported in early January that Pep Boys was taking to Republic Industries (AutoNation) about becoming their auto parts supplier. Additionaly, I was told by Investor Relations that they have signed an agreement with CarMax to be their exclusive parts supplier.

Perhaps Pep Boys will bundle these news bits for release at the annual shareholders meeting which I think is in the first part of May.

Regards
Dave

PS Paul Blakeslee - It you read this, my compliments on your SI Profile. A little spare time and creativity can be a dangerous mix!
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