SunOpta falls to 52-week low, lowers 2007 guidance
Shares of SunOpta Inc. (Nasdaq: STKL) are in the doldrums on news after the close on Thursday that the natural, organic and specialty foods company has lowered its 2007 earnings guidance.
Canada-based SunOpta, which has three business segments focused on healthy products, announced that it expects 2007 net income in the range between $0.12 per share and $0.14 per share, well below its previous projections of earnings between $0.35 per share and $0.40 per share.
Five analysts polled by Thomson Financial were calling for a profit of $0.34 per share.
The company explained that it was forced to make write downs and provisions in the range of between $12 million and $14 million pre-tax due to “issues” within its fruit and bioprocess groups.
The updated earnings guidance includes a $3 million pre-tax provision related to difficulties in collecting for services and equipment provided by the bioprocess group.
SunOpta’s fruit group is a manufacturer, importer and exporter of natural and certified organic fruit and vegetable products, while the bioprocess group designs and builds biomass conversion equipment and facilities.
Worse still, SunOpta said that it is analyzing the impact of adjustments related to the operations of its fruit group and will most likely have to restate its financial statements for the previous quarters.
“They were not keeping up with prices correctly and had to take an adjustment down to market value,” said Scott Van Winkle, an analyst with financial services firm Canaccord Adams, in a phone interview. “This has probably been going on for three quarters.”
Looking ahead, Van Winkle said he is optimistic about SunOpta’s prospects.
“This does not affect their ability to sell products,” he said. “You have an overreaction today, a capitulation in the market.”
Indeed, the company raised revenue predictions for the year to slightly over $800 million, up from its previous guidance of revenues between $775 million and $800 million. SunOpta attributed the upward revision to strong demand in its core natural and organic foods business.
Van Winkle has a “buy” rating on the stock.
At 2:32 p.m. ET shares of SunOpta (STKL) were down $3.30, or 35%, to $6.26. The previous 52-week low of $8.47 was established on Jan. 23, while the 52-week high of $15.50 was reached on Oct. 9, 2007.
