Goldman Downgrade, Airlines on the Mend, Ann Taylor Going Lower
Goldman can’t avoid asset erosion, can it? Dick Bove of Ladenburg Thalmann, who apparently has been bearish on banks since last summer, before it was really fashionable, according to Fortune.com’s Colin Barr, today downgraded shares of Goldman Sachs (GS) from Neutral to Sell, arguing that the company can’t avoid an erosion in its assets as cash markets have failed to keep pace with indexes that mirror cash, according to Briefing.com. Bove says Goldman also is due to suffer some impairment from markets outside of commodities and currencies, where it has done well. Bove lowered his price target on Goldman from $203 to $151, says Briefing. Goldman shares, after trading down about 1%, are actually up fractionally at $178.94.
Airlines flying high again Shares of AMR Corp. (AMR), the parent of American Airlines, were on the mend after yesterday’s 24% decline, precipitated by the announcement that American plans to cut domestic flight capaity by 11% to 12% this year. The shares were up over 8.3% today at $6.74. But there’s always a spoiler: MarketWatch notes that airline analyst Ray Neidl at something called Calyon Securities (who dat?) downgraded Delta Air Lines (DAL) and Northwest Airlines (NWA) on oil prices. Neidl says oil above $130 represents the airlines’ biggest challenge. Delta shares, which yesterday hit a record low, were up 5.2% today at $6.07, while Northwest were up 6.28% at $6.77.
Ann Disappoints, Gamestop Plunges There’s a spate of retail reports out this morning, including Ann Taylor (ANN), Footlocker (FL), and The Bon-Ton Stores (BONT), and none of them seem to be cheering investors. (Gap (GAP) reports today after market close.) Ann Taylor had a tough first quarter, the cmopany’s management said on a conference call with analysts this morning. Although profit in the quarter ended May 3 beat estimates by a penny, excluding costs, net income was down 18% to $25.9 million and the company said it will have an additional $7 million to $8 million, while net store sales declined 11%. The store forecast profit below estimates at 42 cents a share to 47 cents versus consensus estimate of 47 cents. Ann Taylor shares were down 2.35% at $26.14. It’s not clear what’s bugging people about video game retailer Gamestop (GME), meanwhile. Its shares are down almost 10% at $45.92. The company beat its own forecasts with 37 cents a share in profit as sales rose 42% year-over-year to $1.8 billion. The company forecast first quarter earnings a little ahead of consensus, at 26 cents to 28 cents a share. I suppose beating slightly is not what investors expect in the video game business. My colleague Eric Savitz muses on the matter over at TechTrader Daily.
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