CIBC World downgraded Talx (TALX ) to sector underperform from sector perform.
On Thursday Talx, a provider of automated employment and income verification services, cut the fiscal 2004 earnings per share from continuing operations estimate to 96 cents to $1.00, and forecast 22 cents to 24 cents third-quarter earnings per share. Analyst Thatcher Thompson says he's downgrading on: 1) The Work Number, the company's strongest, most profitable segment, will face difficult year-over-year comparisons; 2) UC eXpress (59% of revenues) is likely not achieve the 7% to 9% growth the company had targeted in the near term; 3) steep valuation.
Thompson says the company boasts a strong business model, yet with lowered guidance, and slowing near-term growth, he thinks the current multiple of 24 times the forward earnings per share is too rich. He cut the $1.04 fiscal 2004 (March) earnings per share estimate to 97 cents, and trimmed the $1.15 fiscal 2005 estimate to $1.08.