Friedman Billings cut CompuDyne (CDCY ) to market perform.
Analyst Michael Hoffman says fourth-quarter results for the maker of physical and electronic security products weren't bad, but the backlog was under pressure. He believes the near total loss of predictability severely compresses valuation. All business units reported a decline in backlog sequentially, year over year.
Hoffman thinks the steady decline at the institutional business is most worrisome, as it has a 15- to 18- month conversion cycle compared to 3 to 6 months for other segments. He says buying growth is the next best option.
He cut the 65 cents 2004 earnings per share estimate to 50 cents, and notes there's a downside case of 20 cents per share if 100 basis points of cost cutting isn't effected immediately.