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RadioShack Corp.’s mounting losses amid declining sales have been widely covered in the media. The company’s misfortune has also inspired Wall Street analysts to slash their target price on the stock, with a range this year of $1 to $3 a share.
However, that changed on Wednesday after B Riley analyst Scott Tilghman, who already rates the stock RSH a sell, lowered his price target to zero from $1 a share after the company on Tuesday reported another in a series of wider-than-expected losses. The company’s cash level also plunged. Chief Financial Officer John Feray said Tuesday the company has enough liquidity to execute its turnaround over the next 12 months, and that it’s examining expenses from utility bills to ocean freight.
“We think survival is in real jeopardy” with the cash burn and lack of asset value, the analyst told MarketWatch.
Tilghman said in a report that RadioShack is seeking to update 30% to 40% of its inventory and is remodeling some stores. But the company’s lack of capital and the need to “move quickly without fully vetting decisions means turnaround hopes seem to rest on crossed fingers rather than hard data,” the analyst said.
The company’s performance in July and August will be telling as it will need to stock up ahead of the back-to-school sales period, Tilghman said, adding that RadioShack might have trouble getting support from vendors.
“We think the odds of a bankruptcy filing are now over 50%,” he said. “A turnaround is nearly impossible for the company at this point.”
A RadioShack spokesman declined to comment on Wednesday. The company said Tuesday that it has the full support of its suppliers and lenders.
None of the 13 analysts tracked by FactSet rate the stock a buy, with about two-thirds of them ranking RadioShack a hold and the remainder a sell. The stock has lost half of its value this year and most recently fell 5% to $1.31. At its peak in 1999, the stock was trading close to $80.
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