UPDATE 1-RESEARCH ALERT-Banc of America upgrades RadioShack
May 2nd, 2008 | by admin |(Changes source, adds analyst’s comments, background and sharemovement)
May 2 (Reuters) - Banc of America Securities upgradedRadioShack Corp (RSH.N: Quote, Profile, Research) to “buy” from “hold,” saying theconsumer electronics retailer’s stock deserved another look asthe company’s underlying story was compelling.
The story is about a new management team that is improvingthe stores, adding new products and having a highlyleverageable cost structure, analyst David Strasser said.
The company made two key hires including the recentappointment of Bryan Bevin, formerly at BlockbusterEntertainment Ltd, as executive vice president of storeoperations, Strasser noted, adding that he expects a marketingchief to be hired soon.
RadioShack, which competes with Best Buy Co (BBY.N: Quote, Profile, Research) andother chains, has been closing unprofitable stores and reducingstaff since Julian Day, a turnaround veteran, became chiefexecutive in 2006.
“After about 2 years of cost cuts and inventory reductions,the leverage to the model will provide exciting earnings growthwhen and if comps turn positive, while maintaining grossmargin,” Strasser wrote in a note to clients.
The analyst raised his price target to $20 from $18.
Shares of the company were trading up about 2 percent at$15.43 in morning trade on the New York Stock Exchange.(Reporting by Tenzin Pema in Bangalore; Editing by JarshadKakkrakandy)
