Throwing in the Towel on SRA International

Originally recommended on Aug. 22/05 (IWB #2532) at $34.30. Closed Friday at $21.66 (prices in U.S. dollars).

Shares of SRA International (SRX) went into free-fall after the company announced third-quarter 2008 earnings that fell well short of analysts' estimates and cut its guidance for the rest of the year.

SRA showed a 20% year-over-year earnings gain, but the profit of 30c a share was a penny short of predictions. These days, even a one cent shortfall is an invitation for a market thrashing.

I'm throwing in the towel on this one. I recommended SRX as part of my Homeland Security package but this has not provided much security and is down 37% from where we recommended it at $34.30. There are better places for your money than this company and there is just not enough momentum behind this stock to get excited about.

Action now: Sell.

Disclosure: Long

Comments

[oldsraemployee:]

I never understood the wildly overestimates on this stock. This is just another beltway bandit and a mid-teir one at that. There was not ever going to be massive growth in a company such as this one and the senior leadership is pretty dismal.
I expect this stock to drop to about $10 and stay there for a very long time. Look closely as this company really does not have much to offer and is no different from its far stronger competitors like SAIC, etc.

2008 Aug 04 09:36 PM