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Hospira Inc. Message Board

  • snugly60031 snugly60031 Aug 9, 2006 11:56 AM Flag

    Be Wary of Mid-Day Partial Recovery

    The usual pattern for stocks posting disappointments is sharp downside initial reaction, then partial recovery during mid-day as bargain hunters step up, then continued sell-off in the afternoon and following days. Good examples are MDT and IRIS.
    Today's earnings disappointment is the 2nd in a row this year for HSP. IMO stock has had a bullish sentiment dating from positive earnings in quarters after ABT spin-off. But two bad quarters in a row will cause loss of much of the Bull following. I believe the stock will now continue weakness until Management inspires the Street that it is turning the company around.
    The commodity type products in the company's line compete mostly on price, so key to profits is cost control. Report shows costs way too high. If Management is going to inspire the Street, it needs to demonstrate that it is willing to do the things necessary to get its costs under control.
    One major cost is options expense. It used to be that companies could sweep that part of executive compensation under the rug, but no longer. Since executives are the largest recipients of that benefit, a good place for Management to start to inspire the Street and the rank and file employees would be an across the board pay cut for top management.
    Rank and file employees are going to face the brunt of Management's cost cutting moves, plus they are seeing their 401K's diminish in value, so IMO an important boost to their morale would come from the appearance that top management is sharing some of their pain.
    Anyway, I'm long through the ABT spin-off divi, and I would like to see the company stock back up to its old high and beyond. But I'm a realist, and I don't see it happening unless there is a catalyst. Management needs to provide that catalyst. Good Luck Longs, Snug

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