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Baird Downgrades Tetra Tech Rating


Tetra Tech (TTEK) sees earnings per share of 16 cents in the third quarter and 24 cents in the fourth. R.W. Baird downgraded its investment recommendation on the shares to underperform from neutral.

Analyst Richard Eastman told Standard & Poor's MarketScope that Tetra is reducing its expectations because it is not experiencing recovery in certain state and local infrastructure regions. He notes that the construction of a sizeable wireline project, Utopia, has been pushed back into August-September. As such, Tetra sees the need to consolidate some of its business units and write off some of its equipment. Eastman says that productivity and restructuring expenses will hurt results. Additionally, the analyst notes that revenue shortfalls stem from project areas comprising time-and-material (as opposed to cost-reimbursable) contract revenues. As a result, Eastman cut his fiscal 2004 (ending September) earnings per share estimate from $1.05 to 86 cents and his $1.24 fiscal 2005 earnings per share estimate to $1.15. He also lowered his $23 price target to $18.


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