The Corporate Executive Board - Bear Of The Day
We maintain our Sell rating on shares of The Corporate Executive Board following the release of third-quarter results.
We believe the shares of The Corporate Executive Board are overvalued near current levels, in light of the weak conditions in the current operating environment. Although Q3 results came in ahead of expectations, we have reduced our fourth-quarter 2008 and full-year 2009 EPS estimates as the company's outlook remains modest, in part due to the fact that EXBD has yet to improve its cross-sell ratio.
Rather, the cross-sell ratio continues to deteriorate, and management has lowered its forward guidance as a result. We have identified several concerns within the company's current operating statistics, which we have detailed above. Given the current operating pressures, along with ongoing concerns regarding a slowing economy, we believe the shares should trade at a discount to the peer group average.
Our target price of $22.00 per share equates to roughly 10x our 2009 EPS estimate. In light of these issues, we anticipate that the company's shares will under-perform the market in the near-term.
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