Jefferies barely cut estimates and reiterated its buy recommendation on America Service Group (ASGR ,) explaining that investors are overreacting to recent news about the company's loss of a services contract in Hillsborough County, Fla.
Analyst Anton Hie says the contract news is disappointing, but not a total surprise. The company lost the deal over pricing differences rather than performance, after having vied for the new contract against a small rival led by America Service Group's co-founder, Hie says. The analyst cut his estimates on the stock based on the low end of his revised guidance: $1.43 earnings per share for 2005 from $1.45, and $1.57 earnings per share from $1.60 for 2006.
Hie still thinks America Service Group is well positioned, however. He said he absolutely would urge investors to buy the stock on its weakness today.