Robert W. Baird downgraded Arvinmeritor (ARM) to neutral from outperform, after the company announced fourth quarter results on Tuesday.
Arvinmeritor posted 17 cents fourth quarter earnings per share and cut its fiscal year 2006 earnings per share forecast.
Analyst David Leiker says the results disappointed consensus estimates. He says top-line growth is expected to be slow near term, as the company examines its current book of business and selectively bids on new business. It says the restructuring actions are expected to begin taking hold in fiscal year 2006 and generate $30 million to $40 million of savings. The savings are expected to reach a full run-rate of $50 million to $60 million annually the following year. He cut his $1.85 fiscal year 2006 (ending September) earnings per share estimate to $1.50 and his $1.35 fiscal year 2007 estimate to $1.20. Despite the downgrade, he remains constructive on the prospects for long-term recovery in the company's earnings per share growth.