Ahead of the Bell: American Reprographics

HARTFORD, Conn. (AP) — American Reprographics Co., a large-format document-reproductions supplier, continues to be hard hit by falling nonresidential construction and few cost-cutting opportunities, prompting an analyst shift to "Neutral" from "Outperform."

Robert W. Baird analyst David J. Manthey told investors Wednesday, "The downgrade reflects our belief that nonresidential construction trends have yet to find a bottom, further cost reduction opportunities seem limited and a lack of potential positive catalysts (are) on the horizon."

Shares of American Reprographics tumbled 18 percent on Tuesday, after the Walnut Creek, Calif., company slashed its outlook.

Manthey said he no longer finds near-term valuation compelling and despite the fall in its share value, does not expect American Reprographics to outperform the market over the next 12 to 18 months. His new price target is $9, down from $12.

American Reprographics cut its profit forecast for 2009, to 27 cents to 33 cents per share, excluding a charge of 5 cents to 7 cents related to an agreement with creditors. That's down from a previous profit forecast of 50 cents to 70 cents a share.

"Longer term, we believe (the company) remains a solid story given significant eventual earnings leverage, favorable secular dynamics and favorable positioning for the ongoing digital transition," he added.

In premarket trading Wednesday, American Reprographics shares fell 7 cents to $7.90. It closed the regular session Tuesday at $7.97, down $1.76, as investors digested the company's revised view.