NEW YORK (AP) — Shares of Chiquita Brands International Inc. slid to their lowest levels in more than three years on Wednesday after the produce company reported a loss for the first quarter, stung by charges and lower banana prices. Its adjusted earnings were well below Wall Street's view.
THE SPARK: Chiquita Brands said Tuesday that it lost 24 cents per share in the quarter, with revenue down 4 percent to $793 million. Excluding charges related to the relocation of its headquarters and other items, earnings were 4 cents per share. Analysts surveyed by FactSet predicted earnings of 32 cents per share on revenue of $768.2 million.
THE ANALYSIS: Jonathan Feeney of Janney Capital Markets cut Chiquita Brands' rating to "Neutral" from "Buy" due to its disappointing quarterly performance. The analyst also expressed concern about the company's shift toward more salad products.
"We just don't see how this new wave of investment behind salads necessarily leads to higher profits in the future," Feeney said.
Jefferies & Co.'s Scott Mushkin lowered Chiquita Brands to "Hold" from "Buy" and reduced its price target to $7.50 from $12.
"Despite management's best efforts to rationalize and grow the business, competitive forces plus a very challenging macro environment in Europe are leading to continued earnings pressure," Mushkin said.
The analyst added that conditions are not likely to get much better near term, and may even get worse in Europe, prompting him to give pause on the company at this time.
SHARE ACTION: Chiquita Brands' stock plunged $2.49, or 31 percent, to $5.53 in afternoon trading after falling as low as $5 earlier in the session. The stock is down 6 percent for the year to date and is at levels last seen in March 2009.