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CS First Boston Lowers Shaw to 'Neutral'


CS First Boston downgraded Shaw (SGR) to neutral from outperform.

Analyst John McGinty says Shaw is likely to tread water until it overcomes certain issues. It notes Shaw, in third-quarter financial results, cut the $1.32-$1.37 fiscal 2003 (Aug) earnings per share guidance to $1.25-$1.27, and trimmed the $1.45-$1.65 fiscal 2004 guidance to $1.15-$1.25. McGinty says instead of breakeven free-cash flow in the second-half of fiscal 2003, Shaw expects to use about $70 million to $75 million. McGinty notes net debt to capital now stands at 29%; in order to eliminate Liquid Yield Option notes, Shaw needs roughly $350 million in cash -- up from the current $260 million level. He cut the $1.35 fiscal 2003 earnings per share estimate to $1.25, and cut the $1.50 fiscal 2004 estimate to $1.00. He also cut the price target to $10.


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