Thomas Weisel downgrades Ingram Micro (IM) to peer perform from outperform.
Analyst Matt Sheerin says he is downgrading on growing concerns that price competition among IT distributors in North America are more widespread than he had thought.
Given this pressure, he thinks it will be hard for the company to meet its goal of improving North American operating margins to 1.5% by third-quarter (from 1.2% last quarter). He says this puts his 2005 margin and earnings per share estimates at risk.
Sheerin says with the stock trading generally in line with its historic average (14 times his 2005 estimate, about 30% above its tangible book value), his risk/reward scenario is no longer compelling. He maintains his $1.28 2005 earnings per share and $1.38 2006 estimates.