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DB Alex. Brown Cuts Gillette to Market Perform


DB Alex. Brown cut Gillette (G) to market perform from buy.

On Wednesday, Gillette management acknowledged the company's "chronic underachievement", and set steps to improve its performance. Analyst Andrew Shore says while CEO Jim Kilts' plan is short on specifics, Kilts did present a dose of reality. Simply put, Gillette's fundamentals are very weak. Shore cut the $1.10 2001 EPS estimate to $1.00, with an early 2002 estimate of $1.10-$1.15.

Shore's concerns include a lack of EPS visibility, expectations for a fight in the batteries segment with lower margins, the strategic risk on Gillette's renewed focus on the mid-tier price market, the uncertainty of the timing of savings, and current valuation. He cut the $31 12-month target to $28.


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