Lexmark: Bernstein Cuts Rating; Sees No Catalysts Ahead
Lexmark inkjet business Likely to Be Shut Down
Bernstein Research analys Toni Sacconaghi this morning cut his rating on printer maker Lexmark to Market Perform from Outperform, while slashing his target on the stock to $38, from $46. LXK closed Friday at $34.28.
In a research note, Sacconaghi asserts that “material stock outperformance appears unlikely in the face of flat to declining revenues over the next few years, fears about longer term secular pressures and the company’s history of inconsistent financial performance and associated stock volatility.”
He noted that the printer market is likely to grow 2% a year at best going forward. “We remain unconvinced that Lexmark can regain traction in inkjet, and believe the business is ultimately likely to be shut down, incurring a further cash drain on the company and some de-scaling risk,” he writes. And he adds that “Lexmark’s laser business, while healthy, is unlikely to sustain the pace of recent share gains and could see slower revenue growth going forward.”