From Standard & Poor's Equity ResearchROTH CAPITAL CUTS CHARLOTTE RUSSE HOLDING TO SELL FROM HOLD
Roth Capital analyst Elizabeth Pierce says Charlotte Russe Holding (CHIC) announced resignation of its CFO, Patti Johnson; and EVP/GMM, Patti Shields. She says these departures were unexpected. She says she has to believe they are somewhat related.
Pierce further believes that the departures are likely a response to the board's desire to take more proactive role in running the company and, thus, the team felt it best to "step aside" and let the board chose a new management team. She notes the management team she felt comfortable with running the business is gone.
She believes the departure of three senior members of management team will create additional overhang on the stock until there is greater certainty that there is nothing more to the story. She cuts her $14 price target to $9.
WACHOVIA UPGRADES KINDRED HEALTHCARE TO OUTPERFORM FROM MARKET PERFORM
On Aug. 1, Kindred Healthcare (KND) posted $0.38 second quarter EPS and raised 2008 reported EPS guidance to $1.50-$1.60.
Wachovia analyst William Bonello expects EPS growth to accelerate due to improved Medicare reimbursement, growth at new long term care hospitals (LTCHs), increased use of recently developed high acuity skilled nursing facility (SNF) units co-located in hospitals and payor mix shift and margin expansion from upgrading nursing home facilities. In a stable reimbursement environment, he thinks KND should leverage mid-single digit EBITDAR growth into 20% EPS growth, as non-operating costs are largely fixed or declining.
Bonello raises $1.46 2008 EPS estimate to $1.55 and $1.62 for 2009 to $1.86. He says his 12-month valuation range for the stock is $33-$35.