SPX Ratings Cut After Earnings Report
Friday February 27, 5:11 pm ET
Analysts Slash SPX Ratings, Shares Plummet After Disappointing Earnings Report
NEW YORK (AP) -- SPX Corp. shares plummeted Friday as a slew of analysts complained of disappointing earnings and slashed ratings and estimates.
Though the Charlotte-based diversified manufacturer late Thursday reported that fourth-quarter profit rose from a year earlier, analysts noted that it was boosted by special items. SPX's forecast for this year was also worse than analysts expected.
SPX shares closed the day at $42, down $11.30, or 21 percent, on the New York Stock Exchange.
SPX reported fourth-quarter net income of $98.9 million, or $1.30 a share, from $76.8 million, or 95 cents a share, a year earlier.
Wall Street had expected the company to earn $1.29 a share, according to Thomson First Call, which polled nine analysts.
Revenue rose to $1.45 billion from $1.32 billion a year earlier.
SPX said it is targeting 2004 earnings of $3.41 to $3.60 a share, while Wall Street expected the company to earn $3.85 a share.
JPMorgan's Don MacDougall said he was disappointed by "the poor quality" of the fourth-quarter earnings and weak 2004 forecast. He lowered his rating to "underweight" from "overweight."
SPX still looks cheap, MacDougall said, but he said the market is likely "to demand an abnormal discount" now.
Banc of America Securities analyst Nicole Parent said, "It's clear that things are much worse than even we expected at the divisions."
Parent kept a "neutral" rating on SPX, but trimmed her target price 15 percent to $53 from $62. That assumes it will trade at a 20 percent discount to peers such as Honeywell International Inc., Tyco International Ltd. and United Technologies Corp., based on 2005 estimates, she said.
Goldman Sachs and Smith Barney also downgraded their ratings on SPX.
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