“This is the End” was the exact reference given by Gary Balter, Credit Suisse Group AG (ADR) (NYSE:CS) analyst, for Sears Holdings Corp (NASDAQ:SHLD). The shares of Sears Holdings Corp (NASDAQ:SHLD) have declined 6.36% since the statement on Thursday.
After having a look at the performance of Shears Holdings in 2014, Balter concluded that the company is generating as much as $1 billion to $2 billion in negative operating cash flows. He further added that Sears Holdings Corp (NASDAQ:SHLD) is going down the way unless they sell off some major assets while having a positive cash flow. He further changed the rating to Underperform for the company with a target price of $20.
In addition to the rating from Balter, Sears Holdings Corp (NASDAQ:SHLD) announced that the company will receive financial aid from Eddie Lampert’s hedge fund with a $400 million loan, which is just enough to keep it floating for another three months. However, the company is going to need at least 10 times this amount to sail for the next two years.
Balter identified three key factors for the downgrading of Sears Holdings Corp (NASDAQ:SHLD) including the disastrous quarterly result from the company and lack of any new tricks or strategies to stabilize its financial assets. On top of it, the store announced only partial commitment towards apparel sales for the upcoming Holiday and Christmas shopping season.
Sears Holdings Corp (NASDAQ:SHLD) reported its second quarter 2014 results with a net loss of $573 million attributable to its shareholders with an adjusted EBITDA of $313 million. The company had $839 billion cash in hand on a consolidated basis with total available credit to borrow at $486 million on a consolidated basis.
This article has been written by Prakash Pandey.