Ahead of the Bell: Lehman starts RadioShack at 'Underweight'

NEW YORK—A Lehman Brothers analyst started coverage of RadioShack Corp. with an "Underweight" rating, saying the electronics retailer is unlikely to improve its sales over the course of the year.

Michael Lasser set a year-end price target of $15, implying he expects shares of the Forth Worth, Texas-based company to fall about 13 percent by the end of 2008.

Lasser noted that RadioShack has reported higher earnings recently -- first-quarter earnings climbed 20 percent -- but the company achieved the results largely by cutting expenses. Now, he said, the company must generate stronger sales if it hopes to drive earnings higher, and that seems unlikely.

"In our view, the rapidly deteriorating economic environment, along with a highly competitive consumer electronics market, will make it difficult for (RadioShack) to improve its sales performance over the next year," the analyst wrote in a note to clients.

Lasser forecast RadioShack will earn $1.55 per share in 2008, 5 cents short of analysts' average estimate, according to a poll by Thomson Financial.