Zacks Investment Research downgraded shares of Sears Holdings Corporation (SHLD) from OUTPERFORM to NEUTRAL on September 14, 2012, with a target price of $63.00.
Based on the company's weak quarterly results, we have downgraded our long-term recommendation on Sears to Neutral. The company's loss per share of $0.86 was wider than the Zacks Consensus Estimate of a loss of $0.84. Its sales of $9,467 million also missed the Zacks Consensus Estimate of $10,028 million. However, on a year-over-year basis, Sears' loss per share narrowed from the prior-year quarter's loss of $1.18. The improved results were primarily driven by its ongoing cost reduction, inventory management, strengthening liquidity strategies and merchandise initiatives. Moreover, adjusted EBITDA margin expanded 100 basis points to 1.6% in the quarter. Apart from this, Sears has been focusing on improving margins through leverage on buying and occupancy expenses. Further, we believe that lowering of stake in Sears Canada will strengthen its liquidity position while boosting its future growth prospect.
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