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First Albany Cuts Shaw Group to 'Underperform'


Shaw Group (SGR) posts third-quarter earnings per share of 30 cents (excluding charge), vs. 61 cents, on 9.5% revenue drop. It sees 23 cents to 25 cents in fourth-quarter EPS, and $1.15 to $1.25 in fiscal year 2004.

First Albany downgraded the shares. Analyst Sanjay Shrestha says he is cutting the stock to underperform from neutral because huge cash usage in the quarter heightens risk tied to the company's ability to meet obligations of its LYONs debt next May. He says an optimistic scenario calls for a cash deficit of about $50 million, with more realistic scenario of a deficit of about $100 million.

He notes the company used a total of about $71 million in cash in the third quarter, with about $40 million for working capital, $18 million for an acquisition, and $13 million for financing fees. In step with guidance, he cut $1.35 fiscal year 2003 (ending August) EPS estimate to $1.24, and $1.25 fiscal year 2004 forecast to $1.15.


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