Shares of Corporate Executive Board Co. plunged to a four-year low Thursday after the management consultancy forecast a much smaller profit in 2008 than analysts expected.
The Washington, D.C.-based company estimates a profit of $2.06 to $2.22 per share in 2008, while analysts polled by Thomson Financial expected $2.46 per share. Although the company's fourth-quarter results surpassed their estimates, analysts were troubled by the falling value of Corporate Executive Board's contracts.
The stock dropped $12.81, or 24.7 percent, to $39.01 in morning trading, and fell as far as $38.21 right after the opening bell. That was Corporate Executive Board's lowest share price since July 2003.
Lehman Brothers analyst Gary Bisbee, who slashed his price target to $42 per share from $62, said that revenue growth and contract value slowed down from the third quarter. He added that the company's cash flow was poor.
"Last night, Corporate Executive Board reported mixed fourth-quarter results and extremely disappointing 2008 guidance that indicates that the company's sales force execution challenges continue to worsen," Bisbee said.
Robert W. Baird analyst Mark Bacurin said the company's sales force was less productive because of high turnover and broader economic factors. He cut his price target to $45 per share from $81.
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