Ahead Of The Bell: RC2 Downgraded

NEW YORK (AP) — Toy and children's product retailers being cautious about their inventory levels will likely hurt RC2 Corp.'s sales in the first quarter, an analyst said Friday as she downgraded the stock.

Caris & Co. analyst Linda Bolton Weiser said in a note to investors that educational toy maker LeapFrog Enterprises Inc. announced last month its sales would fall by 50 percent due to retailer inventory reductions. RC2 is likely experiencing something similar, Bolton Weiser said.

Furthermore, shares are up 40 percent since she upgraded the company to "Buy" on Feb. 19, so the stock is fairly valued, Bolton Weiser said.

Additionally, she expects the company to lower its 2009 estimates which could pressure the stock.

She downgraded the company to "Average."