WH Smith downgraded to "underperform"

12/19/06 - Seymour Pierce

LONDON, December 19 (newratings.com) - Analyst Richard Ratner of Seymour Pierce downgrades WH Smith Plc (SMWH-GBX) from "hold" to "underperform."

In a research note published this morning, the analyst mentions that the downgrade in the rating is due to th company's stock being overvalued at present. The recovery in WH Smith's profits was driven by increased gross margins and enhanced cost control, the analyst says. Although the company is currently focused on the book industry, anecdotal evidence supported by Bloomsbury's profit warning points towards disappointing book sales, with the book industry witnessing double digit LFL declines in recent weeks, the analyst says.