Wedbush predicts bankruptcy for RadioShack

Wedbush will announce its Q2 report on RadioShack tomorrow. Michael Pachter and his team at Wedbush predict the electronics retailer will “see persistent structural decline as Internet sales continue to take share.

Wedbush gave RadioShack a rating of “underperform.” Also, the electronics retailer’s 12-month price target dropped from $1 to $0.

“Reiterating our underperform rating and lowering our 12-month price price target to $0 from $1 as declining CE sales and continued margin erosion will likely compel the company to enter bankruptcy in order to pursue its turnaround. Our price target reflects our expectation that creditors will force a reorganization and wipe out RadioShack’s equity.”

Read More RadioShack shareholder negotiating rescue package: Report

According to Wedbush, RadioShack’s negotiations with its creditors are preventing the company from achieving its initial goal of 1,100 store closures for the year. However, the electronics retailer is still pursuing other cost-reduction methods. RadioShack has been actively negotiating with landlords in order to reducing rent expenses. Also, according to Wedbush, RadioShack aims to reduce compensation by “optimizing labor hours and store operating hours, and reviewing other expenses for cost-reduction opportunities.”

Read More RadioShack is running out of cash: Moody’s