Shares of the PC maker closed yesterday's session down 1.15 to 31. Analysts have already been ferreting out information about PC sales for the holiday season.
Merrill Lynch analyst Steve Fortuna reduced his sales estimate for the company, lowering the target for the fourth quarter sales growth to 24 percent, or $3.04 billion, from 28 percent, or $3.14 billion. In a research note, he said that he believes Gateway will meet the 24 percent consensus sales growth rate, but that the revision essentially rules out any reasonable chance of an upside to that figure.
The analyst noted that October sales tracked in-line with expectations, but, despite pre-Thanksgiving sales strength, he saw weakness in November.
"For the all-important kick-off to the retail selling season, we believe that volumes showed significant improvement over pre-holiday weeks but were not quite as strong as originally hoped for," he wrote.
The Merrill Lynch revision comes a day ahead of the company's presentation at the CS First Boston Technology conference.
In his note, Fortuna said that, given the management's past record of being straightforward with the Street, he expects Gateway to issue a statement about the sales outlook for the quarter.
"At this juncture, we think that Gateway could choose to err on the side of caution by saying that it was mildly disappointed in the past weekend's results," he added.
The analyst reiterated his 63 cent earnings per share estimate, which is a penny above the First Call number, as well as a $45 price target on the stock. Fortuna also maintained an intermediate-term "buy" rating on Gateway shares, but urged caution ahead of Thursday's presentation.