SPAR Spartan Motors initiated with an Outperform at Barrington- tgt $13 (9.70 )
Barrington initiates SPAR with an Outperform and a $13 tgt saying they believe that SPAR is continuing to make improvements to the military chassis operation. However, they expect that the military capacity expansion will result in a lower-than-expected Q4/07 gross margin. As such, their Q4/07 EPS number is well below the Wall Street consensus. Long-term, they believe that SPAR can grow both sales and EPS as military production inefficiencies and parts shortages are worked out. For SPAR stock to work, Q4/07 and Q1/08 should see improvement in military gross margin and heavy MRAP new orders. SPAR is also strategically positioned to take advantage of a better 2008-2009 RV chassis market.
I think you have to take the metrics as a whole...
SPAR is only marginally profitable; their cash position vs. debt is very weak; cash flow is very poor; they just missed on revenue, and earnings miss was .15 cents!....approx. 2/3 off expectations!!
I am not short and think SPAR has a bright future...but when you are a small company that screws up big time while holding a roughly 20% short interest near tax selling season....in this market with the uptick rule suspended THIS is WHAT HAPPENS.
SPAR will have to regain WS confidence...their future will look much better should FRPT indeed secure a large percentage of the upcoming DOD MRAP orders expected in DEC.
I believe due to the severity of the drop alot of folks have lost faith in company and have good valid questions as to if something is going on that we don't know about. people are hurting from that drop including myself. Got to know when to hold'em or fold'em. My decision is to hold on and add. sink or swim. i see beyond 2008 and we are going to need to do alot of replacing of our armory after IRAQ without ANY doubt unfortunately. GD is a top notch company and spar is in bed with them in their planing stages imho. Everyone in the business will get a piece of the pie bwdik.