BlueStone Capital Partners Announces Investment Opinion: Bluestone Capital Partners Downgrades Gehl Company to 2-1 from 1-1 Rating.Business Editors NOTE TO EDITORS: The following is an investment opinion issued by BlueStone bluestone, common name for the blue, crystalline heptahydrate of cupric sulfate called chalcanthite, a minor ore of copper. It also refers to a fine-grained, light to dark colored blue-gray sandstone. Capital Partners NEW YORK--(BUSINESS WIRE)--June 27, 2000 Senior Analyst Diane DIANE Diversified Information and Assistance Network (Tennessee Valley Authority) DIANE Direct Information Access Network for Europe DIANE Digital Integrated Attack and Navigation Equipment Griffin at BlueStone Capital is downgrading downgrading A reduction in the quality rating of a security issue, generally a bond. A downgrading may occur for various reasons including a period of losses, or increased debt service required by restructuring a firm's capital to include more debt and less Gehl Company to 2-1 Market Perform-Outperform from 1-1 Outperform-Outperform (GEHL: NASDAQ-$13.88) and lowering the intermediate price target to $20.00 from $25.00 and to $25.00 from $35.00 long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. . Analyst's Summary - Gehl Company announced an earnings shortfall expectation for the second quarter and full year based on several unfavorable market conditions in both its construction and agricultural equipment sectors. We are lowering our intermediate-term rating to a Market Perform (2), but continue to rate the stock an Outperform (1) for the long term, based on new products in the pipeline, savvy management, a diverse specialty product line, and a healthy balance sheet. - Construction. The telescopic handler business continues to soften, with sales for both Gehl and the industry down 15% year to date. Gehl has also been adversely affected by low rental rates with large rental operators decreasing rates by 50%-80% versus a year ago. In addition, there has been a shift in telescopic handler sales from larger to smaller machines. Rental rates for larger machinery has decreased more than for smaller equipment. According to management, there has been more activity for smaller telescopic handlers, and it expects that this will persist throughout the year. The increasing interest rate environment has taken its toll on the housing market and is a good indicator of the telescopic handler market. Since the telescopic handler is GEHL's highest margin product, we believe that the weakness in this industry will significantly affect GEHL's future revenues and earnings. - Agriculture. Management also attributes lower earnings expectations to several factors in its agricultural equipment business. The continuing low milk price environment has resulted in dairy customers delaying or canceling orders. Milk prices have been below $10/cwt for six of the past seven months, with prices dropping to $9.37/cwt in June, an all-time low in the past 10 years. In addition, inclement weather conditions have hurt agricultural equipment sales. May was one of the wettest months in memory and the moisture in the Northeast has resulted in a poor crop for farmers. Furthermore, both GEHL and the overall industry have seen lower implement sales in April and May. Management has seen significantly lower sales of its forage harvesters, box spreaders, and disc mower conditioners year to date versus a year ago. - GEHL has and will continue to adjust run rate to reduce production to control inventory levels. The company plans to take some production out of the second half of fiscal 2000, but does not expect to have any layoffs or work stoppages. Management will likely offer discounts, rebates, or lower rate financings (or a combination) to move out some of the large telescopic handlers. In addition, management will continue to focus on cost-containment measures to help offset some of the challenges in the marketplace. - Pluses. GEHL's multi-purpose skid loaders have fared well with shipments running slightly above a year ago and rental rates holding up well. In addition, sales for GEHL's new mini-excavators (introduced in July/August 1999) continue to grow through trained dealers and management has received positive feedback from end users and dealers. Furthermore, management plans to introduce two new models of skid loaders and a new round baler line by fiscal year-end 2000 or early fiscal 2001, which should help offset sluggishness in its exiting product lines. BlueStone Capital Partners, L.P. is a full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. investment banking and brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. firm that delivers financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. to emerging growth and medium-size Adj. 1. medium-size - intermediate in size medium-sized, moderate-size, moderate-sized sized - having a specified size companies worldwide. BlueStone Capital assists clients in maximizing max·i·mize tr.v. max·i·mized, max·i·miz·ing, max·i·miz·es 1. To increase or make as great as possible: their growth by providing sophisticated investment strategies that are designed to achieve clients' strategic, operating and financial goals. |
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