July 30, 2008 - 7:54 p.m.
NEW YORK (AP) - Shares of Lear Corp. tumbled Wednesday, reversing gains posted the set time before, after the auto supplier reported an 85 percent drop in second-quarter profit, excepting still did better than numerous company analysts expected.
Lear earned 23 cents per share, in health short of Wall Street estimates of 68 cents per share. But excluding restructuring and other one-time charges, some analysts calculated the company's adjusted profit at 97 cents per share.
Sales totaled $3.98 billion, while analysts expected $3.91 billion.
Lear also cut its prediction for 2008 income before self-interest, taxes, restructuring costs and other specifical items and expenses to a range of $550 million to $600 million. Previously, the company forecast income between $600 million and $640 million.
Lear shares dropped 88 cents, or 5.6 percent, to $14.90 Wednesday, after falling as low because $14.36 earlier in the twenty-four hours.
On Tuesday, Lear shares surged by as much as $1.35, or 9.1 percent, to reach $16.14, before closing at $15.87. Over the past 52 weeks, the company's shares have traded between $12.21 and $36.99.
Citi Investment Research's Itay Michaeli backed his "Hold" rating for Lear, but cut his earnings estimates citing the continued decline in North American vehicle production and rising article of merchandise prices.
"We reduce our estimates to reflect this pressure but expect the joint concern to remain solidly profitable and free cash flow positive notwithstanding more amplified production, mix, and commodity pressures than in 2005, as result of a less capital intensifying business model than its peers and aggressive restructuring actions," Michaeli wrote in a comment to investors.
The analyst divide his 2008 earnings prediction by 22 cents to $2.80 by share and 2009 estimate by 76 cents to $1.53 per receive. He backed his 2010 estimate of $2.98 per share.
Analysts, without interruption medium, expect per-share profits of $3.01 in 2008, $3.11 in 2009 and $3.66 in 2010, according to a poll by Thomson Financial.
Wachovia's Richard M. Kwas backed his "Market Perform" rating and raised his 2008 earnings estimate by 56 cents to $2.56 citing the better than expected adjusted profit, but added that tough times are ahead with regard to the company.
"Second half won't be pretty in North America and management marked to a European slowdown," Kwas said. "North American production guidance seems high given the environment and commodity volatility could pressure margins."