Piper Jaffray Reiterates Neutral On Apogee Enterprises (APOG)

Piper Jaffray is reiterating its Hold rating and $12 price target on Apogee Enterprises, Inc. APOG, despite the company missing earnings estimates. In the research note, Piper Jaffray states, "Apogee's 2QFY11 earnings fell well shy of our expectations as the nonres construction market continues to face difficult conditions. Architectural backlog fell another ~10% sequentially to an all time low of $193M, while EPS loss of ($0.18) was beyond even PJC's street low estimated loss of ($0.14) as gross margins reached 12.4%, down 1,350 bps y/y. Free cash flow rebounded to slightly positive based on a reversal of 1QFY11 reflecting seasonal working capital needs." Piper Jaffray went on to note that the backlog was worse than expected. "Sequential backlog trends had been improving from -16.5% in 3QFY10 to -5.5% in 1QFY11, before the 10% drop this quarter. We believe stabilization in backlog will precede better earnings results, and this set back underscores our belief that any meaningful improvement is likely still a CY11 event," the bank wrote. Shares of APOG lost 6 cents to close at $9.54 yesterday.