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Needham Cuts Remec to Hold


Needham cut Remec (REMC) to hold.

Analyst Rich Valera says despite massive restructuring efforts over the last four quarters, Remec's commercial-business margins continue to decline to levels substantially below peers. He notes while margins likely have bottomed in the second quarter, he's not confident that Remec can achieve approximately a 800-basis-point improvement to breakeven, given its operating track record over the last few quarters.

Management said it was facing brutal pricing pressure, which won't end without more industry consolidation, and will further challenge Remec to achieve gross-margin improvement. He widened the 18-cent fiscal 2005 (Jan.) loss estimate to a 43-cent loss.


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