Wachovia Downgrades Fleming to 'Underperform'

Analyst Jeff Omohundro cites the products distributor's new earnings guidance, and lower-than-expected proceeds from the sale of its retail operations

Wachovia downgraded Fleming (FLM ) to underperform from market perform.

On Tuesday the products distributor gave fourth quarter earnings per share guidance of 10 cents to 12 cents from continuing operations. Analyst Jeff Omohundro says the new earnings per share guidance, down from 35 cents to 45 cents, is below his 30 cents estimate.

Omohundro says the company reduced its expectations for proceeds from the upcoming sale of retail operations to below $450 million, from above $450 million. He notes Kmart's plans to close an additional 326 stores, as well as Fleming's previous indication that closures of roughly this scale could negatively impact earnings per share by about 13 cents on an annualized basis.

Omohundro cut the 30 cents fourth quarter earnings per share estimate to 10 cents, and slashed the $1.85 2003 estimate to 89 cents.