UPDATE: Compass Point Downgrades Diebold Ahead of 3Q13 Earnings Report

In a report published Tuesday, Compass Point analyst Douglas Greiner downgraded the rating on Diebold (NYSE: DBD) from Neutral to Sell, and lowered the price target from $25.00 to $23.00.

In the report, Compass Point noted, “Diebold is scheduled to report 3Q'13 earnings on October 30th before market open. The underlying business has been facing significant headwinds. But the stock price does not reflect concerns. We forecast Core EPS of $1.30 this year, which is down from prior year levels north of $2.00. One of the main problems has been lost market share in the regional business where the profitability is approximately twice as attractive as national business. We expect this trend to somewhat mean revert but not fully recover. Thereby, it is important to distinguish that our improving earnings outlook as reflected in our estimates is driven primarily by expense savings initiatives and not core growth. We expect the core business to continue to face pressure in terms of both top line growth and gross margin. Therefore, in our view, we expect investors to re-rate the shares to trough level multiples, which is historically near 9x forward EPS. We lower our target price to $23 ($25 previously), which equals 10x our updated estimate of more normalized 2015 Core EPS.”

Diebold closed on Monday at $30.50.