Re. SFSK- see the following Bloomberg article. The article mentions a couple of warning signs:
Safeskin Shares Fall on Concerns About Sales Growth
San Diego, California, Oct. 29 (Bloomberg) -- Safeskin Corp. shares fell 13 percent on concerns that the company's sales growth would slow.
Shares of the San Diego-based glove products maker fell 3 1/4 to close at 21 1/2 after initially dipping to a 52-week low of 17 3/8 in trading of more than 19 million, about 34 times the stock's previous three-month daily average. The stock was the fourth most-active issue on U.S. markets.
The shares fell after Salomon Smith Barney analyst Melissa Wilmoth downgraded the stock to ''neutral'' from ''buy,'' citing trends in the company's balance sheet reported yesterday. While sales grew about 5 percent in the third quarter, accounts receivable grew 61 percent and inventories at distributors were higher than expected, she said.
''These trends, taken together, could be a harbinger to trouble down the road,'' she wrote.
''The balance sheet trends could resolve themselves and new products make this only a bump in the road,'' she said. Still, the trends are a ''classic signal that is a little too loud for us to ignore at this time.''
Other analysts said they don't foresee problems for the company, which Forbes magazine recently ranked 15th on its list of the 200 best small companies.
Still 'Attractive'
''It's an attractive stock and it remains attractive,'' said John Arege, an analyst at S&P Equity Group. The company is still forecasting 25 percent earnings and revenue growth, he said.
''It's a consistent revenue generator'' that ''continues to hit its numbers every quarter,'' Arege said. ''We don't see any reason to downgrade the stock.''
Arege has an ''accumulate'' on the stock, which he said is equivalent to other analysts' ''buy.''
Wilmoth wasn't available for further comment. Her 12-month price target for the stock is $27 per share.
Safeskin officials didn't return calls for comment.
Wilmoth cut her earnings estimate for the fourth quarter to 27 cents per share from 29 cents per share. For 1999, she cut her estimate to $1.22 from $1.29. Yesterday, the company reported that third quarter net income rose to $16.2 million, or 27 cents per share, from $11.6 million, or 20 cents per share, in the year- earlier period.
17:07:39 10/29/1998
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