Tuesday, July 04, 2006

BearingPoint Stock Upgraded, But Long Way To Go Yet

BearingPoint (NYSE: BE) was recently upgraded by Standard and Poors from 2 stars (sell) to 3 stars (hold), the analyst cited that price declines had led to the stock below $8, and the valuation was compelling. The analyst thinks that the company will earn an EPS of 40 cents due to recent successes in securing contracts. The year-out price target is $8.50 for a P/E of 21...


Anonymous said...

As someone that has had much experience with BE I would agree that there is huge risk in this stock for several reasons:

1. Sales are not improving relative to to their position. Youhave seen only a few key wins with two of them being major subcontracts out of their Public Sector business, but there have been no major contract wins announced in the Commercial Services Business or the Financial Servcies Business.

2. The vast majority of business revenue still comes from ERP Implementations which has a severely declining margin for U.S. based companies and in particular for BearingPoint which has a very poorly run off-shore business in capability and size compared to IBM, ACN and companies like TCS, Wipro, Satyam and Infosys.

3. Many key executives with good track records have left. The current group of Executive Leadership have all been promised large packages if stay till a major sale or change of ownership is completed. This is true for many of the new hires as well. You can see this if you read the SEC Disclosures they have filed. Lot's of interesting reading.

4. They have missed every deadline on filing. They are being sued by the Lenders and Law FIrms from last years Commercial Paper they took to provide cash to underwrite the cost of doing business and buck upthe stock price. They will need to renogiate another line of credit this summer.

5. They have been trying to sell or do a LBO for over a year with no takers. Which Company or Investment Group is dumb enough to buy a company that cannot file a 10k and may not catch up for another year or more which would make it two to three years without filing.

6. Why is Harry You still the "Acting CFO" after 1.5 years???
Doesn't he have enough to do as the CEO???

Anonymous said...

Good information on a possible short on this one. I can vouch that I have only heard negative things about bearing point whenever they are takled about.

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