Coinstar Inc.'s shares fell Friday on news that the company's CEO will retire.
THE SPARK: The company said Thursday that CEO Paul Davis will retire in March and Chief Financial Officer J. Scott Di Valerio will replace him.
Coinstar also said it expects fourth-quarter and full-year revenue within the range of prior guidance, while adjusted earnings per share should be at or above the top end of its range because of lower expenses and tax benefits.
THE BIG PICTURE: Coinstar runs 42,000 Redbox DVD rental kiosks and 20,000 coin-counting machines in supermarkets, drug stores, and other locations.
Davis, 55, has been the company's CEO since April 2009 and is credited with helping to keep Coinstar focused on growth while shedding underperforming businesses. During his time in leadership, the company grew the number of Redbox kiosks seven-fold. He did not disclose his future plans.
Di Valerio, 50, will also join the board of directors when he replaces Davis. He has been the company's chief financial officer since March 2010.
THE ANALYSIS: B. Riley Caris analyst Eric Wold said that while the departure of the CEO is somewhat disappointing, he believes there will be no shift in strategy or outlook.
"Coinstar has hired well ahead of the company's growth curve and has built a deep management team that, most importantly, shares the same strategic views on the company's direction and growth plans," the analyst said in a research note.
Wold said that the drop in the shares is a function of concerns about the future growth strategy and a potential misinterpretation of the guidance wording that the company issued. He kept a "Buy" rating on the shares and an $80 price target.
SHARE ACTION: Shares fell $1.89, or 3.6 percent, to $50.16 in afternoon trading. The stock has traded between $40.50 and $71.82 in the past 52 weeks.