RW Baird downgraded Methode Electronics (METHA ) to market perform from market outperform.
Analyst David Leiker says the stock is trading above the $10 target. Additionally, shares are trading at about 11.1 times the long-term EBITDA, and 8.4 times the calendar 2002 EBITDA. He notes the stock has performed well since the completion of the spin-off of Stratos Lightwave, and says operating results came in ahead of his expectations.
Leiker believes management is doing an excellent job of rebuilding the new business pipeline and stabilizing margins. Over time, this should lead to accelerating internal growth and recovery in margins and valuation. Near term, however, Leiker believes it is too early to pay for this expected recovery.