Channell Commercial "buy," target price reduced

10/16/06 - Brean Murray, Carret & Co

NEW YORK, October 16 (newratings.com) - Analyst Eric C Buck of Brean Murray maintains his "buy" rating on Channell Commercial Corporation (CHNL), while reducing his estimates for the company. The target price has been reduced from $6 to $5.

In a research note published this morning, the analyst mentions that the company has reduced its gross margins and EPS guidance for 3Q due to an adverse product mix. Channell Commercial has indicated that the profitability of its Bushman Tanks division has improved significantly due to its continued efforts to resolve issues related to increasing commodity prices and weak delivery logistics, the analyst says. Channell Commercial's potential entry into the US water market is expected to enhance the company's earnings power going forward, Brean Murray adds. The EPS estimates for FY06 and FDY07 have been reduced from $0.09 to $0.00 and from $0.57 to $0.41, respectively.