Zacks Investment Research downgraded shares of RadioShack Corporation (RSH) from NEUTRAL to UNDERPERFORM on October 05, 2012, with a target price of $2.00.
The nightmare of Radioshack persists as the company continues with its disappointing performance. Second-quarter 2012 financial results were well below the Zacks Consensus Estimates. Management has suspended its dividend in order to reduce its debt burden. Adverse product-mix toward low-margin devices and a volatile macro-economic scenario in the U.S. are taking a toll on the company's financials. The company's core consumer electronics retail business is on a secular downtrend and is unlikely to be revived in the near future. Consumers increasingly prefer online purchasing to visiting retail stores. Loss of foot traffic has severe negative impact on RadioShack's business. Most of the consumers prefer tablets and smartphones, which are less profitable for the retail industry. We do not find any immediate growth catalyst and therefore downgrade our recommendation on RadioShack to Underperform.
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