Why Analysts Are Unhappy With Fairway Group Holdings Corp (NASDAQ:FWM)?

Posted by Chris Bell February 11, 2014 0 Comment 798 views

The $336 million market capped retail chain operator Fairway Group Holdings Corp (NASDAQ:FWM) continues to lose investors in bulk, post its disappointing third quarter results announcements on 6th February. It is also appropriate to note here that the firm’s long serving chief executive officer Herb Ruetsch retired on the same day after putting in 15 years of service with the firm. This departure led to a ripple effect in the management structure, with the current President William Sanford being appointed as the interim CEO. Executive Chairman of the Board of Fairway Group Holdings Corp (NASDAQ:FWM) also took the opportunity to appoint a new COO and CFO in an effort to beef up the management team.

Brief Overview Of 3Q

Fairway Group Holdings Corp (NYSE:FWM) lower than expected third quarter results triggered this lack of investor confidence in the stock. The speciality retailer announced a loss of 74 cents for the quarter, while the analyst community had expected loss of 70 cents per share. Its revenue for the quarter, while going up by 14.3 percent compared to 3Q12 at $205.7 million, came in less than analyst estimates of $207.8 million.

Rating Downgrades Galore

The churn at the top, accompanied with the lower than expected results triggered a host of downgrades of the stock by trade houses and analyst agencies. In a telling commentary which accompanied Credit Suisse downgrade forecast yesterday, the analyst says that, “We have become particularly concerned about the consistency of the earnings shortfalls, the disappointing store opening in Chelsea, reduced visibility in the real estate pipeline, increased competitive pressure, and the management changes.”

Bank of America followed up with its own downgrade recommendation by pegging the stock at Underperform from a previous Neutral and droped the price target to $6 from previous recommendation of $20.

About Chris Bell

Chris Bell is an investing reporter for GDP Insider. Chris covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Chris is also over consumer reporter and covers a wide variety of issues ranging from housing to immigration to urban poverty. Chris graduated from the University of Scranton with a degree in Communication and Philosophy. Chris's diligent investigations earned him the honor of being named "Best Reporter" once by the Headliners Foundation of Texas and once by the Houston Press Club.

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