Zacks Investment Research downgraded shares of Brightpoint Inc. (CELL) from NEUTRAL to UNDERPERFORM on May 29, 2012, with a target price of $4.50.
We downgrade our recommendation on Brightpoint to Underperform based on two reasons – (1) loss of a major client of the company's high-margin Logistics segment in the U.S. (2) broader global macro-economic volatility. The company reported mixed financial results for the first quarter of 2012. Revenue surpassed the Zacks Consensus Estimate but earnings per share fell significantly below it. In the previous quarter, gross margin, operating margin, and net margin dropped 1.5%, 0.5%, and 0.6% year over year, respectively. Meanwhile, management was forced to revise its financial outlook downward twice for fiscal 2012 in the last two months due to the negative developments already mentioned above. Recent consolidation trend among wireless operators may become a long-term negative for the company. The market has become intensely competitive and we do not find any near-term catalyst for Brightpoint.
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