March 28, 2012
Toni Sacconaghi states his belief that “the business is ultimately likely to be shut down” and lowering the stock target to $38.
Bernstein Research analyst Toni Sacconaghi commented on the future of Lexmark, remarking that “[we] believe the [printer] business is ultimately likely to be shut down” following reducing his rating of the OEM from Outperform to Market Perform.
Sacconaghi cut his stock target of Lexmark from $46 (€34) to $38 (€28). The OEM closed at $34.28 (€25.68) on the 23 March.
The analyst makes comment in his research notes that “material stock outperformance appears unlikely in the face of flat to declining revenues over the next few years, fears about longer term secular pressures and the company’s history of inconsistent financial performance and associated stock volatility.
“We remain unconvinced that Lexmark can regain traction in inkjet, and believe the business is ultimately unlikely to be shut down, incurring a further cash drain in the company and some de-scaling risk.”
Sacconaghi concludes that “Lexmark’s laser business, while healthy, is unlikely to sustain the pace of recent share gains and could see slower revenue growth going forward.”
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