- Pre-Market Indications

Thursday, June 19, 2008

Opening View: Coventry Health Care, Huntsman Start the Day with Downgrades

Coventry Health Care (CVH: View sentiment for CVHsentiment, chart, options) this morning lowered its second-quarter and full-year earnings forecast in the wake of higher costs. The managed-care provider now expects fiscal-year earnings of $3.65 to $3.75 per share, far below analysts' average estimates of $4.43 per share. As a result of the news, the company was downgraded to "market perform" from "outperform" at Wachovia Capital Markets. Meanwhile, a Goldman Sachs analyst slashed his price target on the equity to $34 from $47. Ahead of the bell, the stock is set to open significantly below yesterday's $40 closing price.

Speaking of downgrades, the shares of Huntsman (HUN: View sentiment for HUNsentiment, chart, options) were cut to "underperform" from "hold" at Jeffries & Co., with the analyst reducing his price target on the equity to $15 from $28. The chemical company was making headlines before the open after reports that it may not be purchased by rival Hexion Specialty Chemicals. The former potential buyer allegedly claimed that the agreed capital structure for the duo is no longer feasible due to HUN's deteriorating finances.

On the earnings front, J.M. Smucker (SJM: View sentiment for SJMsentiment, chart, options) reported fourth-quarter net income of $37.1 million, or 67 cents per share, compared to earnings of $42.5 million, or 75 cents per share, a year prior. On an adjusted basis, the jelly maker's earnings docked at 73 cents per share, a nickel short of the average analyst estimate. Sales for the quarter jumped 20% to $590 million.

Finally, Circuit City (CC: View sentiment for CCsentiment, chart, options) reported a first-quarter loss from continuing operations of $164.8 million, or $1 per share, compared to a loss of $54.8 million, or 33 cents per share, a year earlier. Analysts were expecting a loss of $1.06 per share. Sales for the quarter slipped to $2.3 billion from $2.49 billion a year prior; analysts had forecast revenue of $2.37 billion. The firm lowered its 2009 capital expenditure forecast to $120 million to $140 million, down from previous guidance of $130 million to $150 million. The electronics company's board also suspended dividend payments in order to conserve capital.

Opening View: Coventry Health Care, Huntsman Start the Day with Downgrades

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