Any buyers at these levels???
<GunnAllen Financial Updates Its Coverage Of JumboSports With A
Speculative Buy Rating And A 1998 Year End Price Target Of $7
TAMPA, Fla., Dec. 11 /PRNewswire/ -- The following was released today by GunnAllen Financial, Inc.:
Tampa, Florida-based JumboSports (NYSE: JSI - news) operates 77 retail sporting goods stores in 29 states. JumboSports
specializes in selling name-brand sporting equipment, athletic footwear and apparel.
On 12/08/97 JumboSports announced the resignation of Chairman, President, CEO and Director Stephen Bebis. Mr. Bebis'
resignation was termed a ''mutual'' decision by JumboSports. Director Jack E. Bush, the former president of Michael's Stores,
Inc. who helped Michael's grow its sales from $362 million to $1.3 billion, has been named acting CEO. Current CFO Ray
Springer, who as the former CFO of Kash n' Karry Food Stores, Inc. oversaw that company's turnaround, has been named
acting president and COO.
JumboSports' shares have been under heavy selling pressure, hitting an all-time low of $1.56 on 12/10/97. The share price has
been especially hard hit in the past few days, seemingly due to the resignation announcement, the present turnaround situation
and year end tax-loss selling. We believe that JumboSports represents significant value at these levels, trading at a 68%
discount to its approximate book value of $5.40 per share.
It should be noted that an investor may incur significant risk by investing in turnaround situations. JumboSports' management
may be unable to secure the necessary debt and/or equity financing necessary to maintain operating capabilities. Additionally, if
JumboSports' management is not able to restore the Company to profitability, it is highly likely that there will be a severe
material adverse effect on the price of its shares.
Despite these risks, we continue to like JumboSports as an asset play. We have full confidence in the transitional management
team and we believe they will restore JumboSports to profitability. The shares may be extremely attractive to a larger retail
entity who is looking to acquire $500 million in annual proforma revenue through the acquisition of JumboSports at its current
market value of less than $45 million. Due to the underlying value of its shares and our belief that management will restore it to
profitability, we are updating our coverage of Jumbo Sports with a Speculative Buy rating and a 1998 year end price target of
$7.
SOURCE: GunnAllen Financial, Inc.> |
