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Wachovia Downgrades American Italian Pasta


American Italian Pasta (PLB) says it will delay its third-quarter report. Wachovia downgraded the stock to underperform from market perform.

Analyst Jonathan Feeney says American Italian Pasta indefinitely delayed third-quarter results and said it expects to fall short of fiscal year 2005 (September) guidance on margin, profitability, and free cash flow. He notes American Italian Pasta also identified $60.7 million in primarily non-cash financial adjustments.

Feeney says extensive promotional activity from competitors that must have driven large market share losses convinces him that the industry is suffering from irrational competition.

He cuts 80 cents fiscal year 2005 (September) EPS estimate to 42 cents on a lack of visibility, and $1.38 for fiscal year 2006 to 98 cents. He has a $14-$17 valuation range for the shares.


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