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The recent sell-off in shares of Harry Winston Diamond Corp. (HWD) was the result of disappointing third quarter results for fiscal 2008, and a reduction in its dividend.

While a cash tax shield is expected to produce higher cash flow per share in 2009, higher interest expenses and strength for the Canadian dollar has led Canaccord Adams analyst Steven Butler to reduce his earnings per share estimate on the Toronto-based diamond miner and retailer to C$1.51 from C$1.55.

His price target, meanwhile, was cut to C$43.50 from C$46.50. But the analyst still considers Harry Winston shares oversold, and maintained his “buy” recommendation.

Mr. Bulter noted that its 40%-owned Diavik diamond mine in the Northwest Territories surprised with better-than-expected revenues and an apparent improvement in realized prices.

Source: Canaccord Analysts Feel Harry Winston Diamond is Oversold