The Globe and Mail

UBS has dimmed the lights at Circuit City Stores Inc., saying that the retailer’s “numerous missteps lately and an increasingly risk averse market” are unlikely to attract investors “until the company demonstrates clear evidence of sustained improvement.”
Analyst Brian Nagel downgraded CC to “neutral” from “buy” and slashed his price target to $8.50 (U.S.) from $20, reflecting a mid-teens multiple on fiscal 2009 per-share profit of 30 cents, “a level that reflects prospects for continued fundamental weakness” plus about $4 a share in cash.
Among other things, he signalled various challenges ahead for CC, including prospects for continued significant earnings declines and the tendency of rival Best Buy Co. Inc. to “execute very well” in holiday selling seasons.
Last week, Bear Stearns downgraded CC to “peer perform” from “outperform” and also warned of the “threat of disruptive pricing behaviour” during the all-important holiday season.
CC closed at $7.91 on the NYSE Wednesday after touching a 52-week low of $7.79 on Tuesday.