Tech Data: Citi Downgrades After Stock Doubles

Tech Data (TECD) shares are losing ground today after Citigroup analyst Richard Gardner cut his rating on the stock Hold from Buy. His price target actually moves up a buck to $37; the stock closed yesterday at $32.50. Gardner notes that the electronics distributor, which yesterday posted better-than-expected results for its fiscal first quarter ended April 30, has seen its share price double in less than 3 months. He writes that his favorable view of the company’s improved execution and market position is unchanged, but that there now appears to be little upside in the near term given the stock trades close to tangible book, with a P/E multiple in line with the S&P 500. He says IT demand visibility in the U.S. remains low, with a more challenging than normal summer expected in Europe. Gardner adds that EPS is highly sensitive to revenue and gross margin, “which means that even a modest downtick in demand could pose a severe risk to EPS estimates.” TECD today is off! ... (link)