A Battery Maker Runs Lowby
It looks like Exide (EX), a major producer of automotive and industrial batteries, may need a power battery of its own. The stock has plunged more than 50% from its 1995 high. The stock, at 20 on Jan. 29, "could still plunge to as low as 12," warns an investment manager in Mills Valley, Calif. What's wrong? Analyst Darren Kimball of Salomon Brothers warns that the "profit shortfall from the weakness in Exide's North American battery business will be more pronounced than previously thought." So he has reduced his earnings estimates accordingly.
Kimball also says that earnings could fall below his already reduced estimates. He has cut his estimate for the year ending Mar. 31, 1997, from $1.40 a share to $1.10, and from $2 to $1.70 for fiscal 1998.
He notes that Exide, which markets its products to merchandisers, auto supply chains, and wholesale distributors, will lose one big customer--Montgomery Ward, a major domestic battery retailer, in April.
Alan Gauthier, Exide's chief financial officer, says Kimball is "all wrong." He insists that Exide is "doing well in total," contrary to the claims of the bears. He adds that shipments to Montgomery Ward aren't very significant to overall sales. And Gauthier is confident that Exide's contract with Sears Roebuck, which expires in September, will be renewed.