SWS Cuts Blockbuster to 'Market Outperform'

Analyst Harry Katica says the movie rental company's sales are slowing as consumers are buying new and discounted DVD titles

SWS Securities downgraded Blockbuster (BBI ) to market outperform from strong buy.

Analyst Harry Katica says the company has experienced a significant slowing of movie rentals since Thanksgiving, as consumers are attracted to the discounted prices offered by mass merchants on new DVD titles. He cut his $1.32 2002 earnings per share estimate to $1.05, and cut the $1.51 2003 estimate to $1.25.

While he believes the exaggerated trade-off from rental to purchases is a temporary phenomenon, Katica says it will take several quarters to see how the trend develop

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