Ahead of the Bell: Donaldson shares slip premarket

Donaldson shares fall in premarket trading after company offers 'tepid' 2010 outlook

• On 8:57 am EDT, Wednesday September 2, 2009

HARTFORD, Conn. (AP) -- Shares of Donaldson Inc. fell in Wednesday premarket trading after the filtration systems maker offered guidance that some analysts said was disappointing.

Analyst Charles Brady of BMO Capital Markets said in a note to investors that the outlook was disappointing, with sales guidance below his estimates.

Jeffrey D. Hammond of KeyBanc Capital Markets said in a client note he expects shares of the Minneapolis company to "consolidate" when the market opens due to Donaldson's "tepid guidance."

Donaldson on Tuesday said it expects fiscal 2010 sales and earnings below Wall Street estimates. It forecast sales of between $1.65 billion and $1.75 billion and full-year 2010 earnings between $1.32 per share and $1.52, including estimated restructuring costs of $12 million to $17 million.

Excluding the charges, it forecasts full-year 2010 earnings per share between $1.44 and $1.64.

Analysts were expecting full-year 2010 earnings of $1.65 per share on revenue of $1.8 billion.

Shares fell $1.93 or, 5.2 percent to $35 in premarket trading after closing Tuesday at $36.93.

Hammond said demand trends have stabilized in some markets and he expects a "modest improvement" in Donaldson's engine aftermarket business and cost savings.

Still, difficult comparisons between the fiscal first half of 2010 and the previous year and the "low likelihood of a swift rebound" in the second half of 2010 will limit the company's ability to increase earnings in fiscal 2010, he said.

Hammond rates the shares "Hold."

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